The Bloomberg Analyst also highlighted the importance of actions, which have repeatedly shown a remarkable correlation with bitcoin. “The bottom line is that there are few more powerful forces in the markets than when the stock market crashes like it did in 1H,” he said.
McGlone also emphasized the key role played by the Federal Reserve which has been making aggressive rate hikes in 2022. This development could create headwinds for risky assets like cryptocurrencies and stocks by increasing the returns paid by lower-risk securities and making them more attractive.
‘Don’t fight the Federal Reserve’ has been my mantra for risk assets since the end of last year,” he stated, adding: “Bitcoin and cryptocurrencies were a key part of the 2021 race and therefore part of the 2022 discharge, but I see that Bitcoin and Ethereum will come out ahead“.
What are the advantages of bitcoin
“Bitcoin is on its way to becoming a global digital security in a world that’s going that way and Ethereum is a prime driver of the digital revolution, as evidenced by making possible the most widely traded cryptocurrency: dollar tokens,” said McGlone.
Budd White, co-founder and chief product officer of crypto software company Tacen, also weighed in on the matter, stating that the digital currency is currently trading well below its real value.
“I remain of the opinion that Bitcoin is not only incredibly oversold, but also in a major accumulation zone. With every price increase with Bitcoin, we grow both its market value and its utility value“, he indicated.
“If you look at the market value of Bitcoin at realized value, or MVRV, we see it around one, which suggests that the market value of this asset has fallen to its true utility value,” White noted. “This also suggests to me that due to the massive sell-offs we have experienced in recent months due to Terra, Three Arrows and the lot, the number of forced sellers remaining in the market is relatively small. Bitcoin therefore seems to have a pretty solid bottom line at or around $18,000 “, he continued.
market resilience
White noted that despite having strong support near the aforementioned price level, bitcoin has been “hovering” near $23,000 lately. “So far, and keep in mind that cryptocurrency prices can change quickly and dramatically, it has held up a lot despite an employment report coming out that was much higher than expectations,” White added.
“It seems that the markets are already pricing in a monetary tightening even more aggressive by the Federal Reserve as a result of these sky-high numbers. Stocks are down and yields are up,” the expert noted. “And again, Bitcoin is just floating,” the market watcher said.
“I am not saying that we are experiencing a decoupling of Bitcoin from equities. Certainly we could be in another leg down in terms of Bitcoin price. But this relative strength tells me that most of the Bitcoin sale could be overdue . And barring any exogenous shocks to markets, such as credit markets looking to be on the verge of breaking, I think investors still see Bitcoin as a decent buy at these levels,” White stated.
potential disadvantage
While White was discussing bitcoin’s recent price resistance, Tim Enneking, managing director of Digital Capital Management, stated that the cryptocurrency could drop back to its recent low below $18,000which reached in June.
“Bitcoin has made a nice if not entirely convincing change, of US$20 thousand as recent resistance (until July 15) to support (after that date, tested once on July 26 and 27, and solidly above since then),” Ennejing said. He added: “While it has been a good move, it has been quite slow and, apparently, uncertain, especially given the stagnation of the summer”
“As a result, most people are still hedging their bets on whether BTC will retry the June 18 bottom at $17.6k. Going forward, I would expect more general slides, a slightly positive move, and that the floor will not be retested. It is a 50-50 proposition if $20,000 will be retested,” he said.
improve the feeling
Investor mindsets have been steadily strengthening in recent weeks, according to the Crypto Fear & Greed Index provided by Alternative.me. This index, which ranges from zero to “Extreme Fear” and 100 for “Extreme Greed”, currently stands at 31, a figure denoting “Fear”.
This figure has followed a constant upward trend since June 19, when it reached a value of six, indicating a state of “extreme fear”. Also, the index has remained at 20 or higher since July 18 .
Armando Aguilar, an independent cryptocurrency analyst, commented on how this measure has changed in recent weeks. “The fear and greed index has recovered from the low 20s after the big crash of some crypto protocols and service providers,” he stated.
“Investors have returned to buying digital assets and the fear indicator has trended towards yellow/buy territory,” Aguilar said. “Historically, the market has seen a price push when the index hits 30“, he continued.
An uncertain prospect
Aguilar went on to provide a broader analysis, assessing the big picture. “There are still macroeconomic and geopolitical pressures lurkingso Bitcoin could hit previous lows if stocks take a hit and investors pull out of risky assets,” he stated. “However, given the current environment and if Bitcoin is able to break above resistance levels, it could experience a positive price boost,” concluded Aguilar.
Source: Ambito
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