bear markets
A Bear of Historic Proportions – Blockchain News, Opinion, TV and Jobs
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2 years agoon
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By Marcus Sotiriou, Analyst at the UK based digital asset broker GlobalBlock
Bitcoin fell below $20,000 briefly this morning, whilst the total crypto market cap fell to below $900 billion, from a high of $3 trillion last year. A new report from Glassnode Insights claims that the current bear market is “a bear of historic proportions,” and highlights that “it can reasonably be argued that 2022 is the most significant bear market in digital asset history.”
Glassnode data such as the market value and realized value oscillator (MVRV, which is a ratio between Market Value and Realised Value) can give us an insight into how this bear market compares to previous bear markets. With the MVRV, we can view the relative monthly capital inflow/outflow into Bitcoin. As this indicator has reached -2.73 standard deviations (SD) from the mean, we can see that Bitcoin is currently experiencing the largest capital outflow event in history.
As mentioned previously, the industry needs regulatory clarity for the next wave of institutional money to enter. British Parliament Member Matt Hancock has called for “liberal” cryptocurrency regulation, claiming that no country can stop the crypto revolution. Hancock said, “I hate the patronizing idea of regulators telling people what they can and can’t do with their money.” Hancock touched on the Terra fiasco serving as an example of the “maturing of the market,” whilst highlighting how there are stable coins with less risk. His claims align with the notion that the UK has the power to choose whether the “crypto revolution” starts in the UK elsewhere.
I agree with Hancock’s line of thought and that we should compare this period in the crypto space to the internet in 2001 – despite the dot-com bubble crashing in 2001, the internet was never discredited as a technology.
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bear markets
Federal Reserve’s Plans to Hike Interest Rates Spooks Traders into Selling Crypto – Blockchain News, Opinion, TV and Jobs
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2 years agoon
June 28, 2022By
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Bitcoin is crashing again, temporarily plunging it to below $20,200 earlier today, as spooked traders have frantically been selling off the cryptocurrency before the US Federal Reserve is expected to do something it hasn’t done in 28 years — increase interest rates by three-quarters of a percentage point.
In response to soaring inflation and volatile financial markets, the central bank will hike the rate that banks charge each other for overnight borrowing to a range of 1.5%-1.75%.
BTC and ETH has fallen to trade just above $20,000 and $1,000, respectively, as the selloff across broader crypto markets continued. This means the total value locked (TVL) of tokens across all blockchains declined by over 8% in the past 24 hours.
Mikkel Morch, Executive Director at crypto/digital asset hedge fund ARK36, is closely following the price movements, he says, “Bitcoin has been really caught in the crossfire these past few days. There is still a huge gap between nominal rates and real rates so there is much more room for the Fed and other central banks to hike in the months to come. Investors can’t realistically expect risk assets to have a more sustained uptrend until the Fed pivots.
Additionally, some parts of the broader crypto ecosystem are facing a rather harsh reckoning. As the reality of the bear market starts to settle in, the hidden leverages and structural weaknesses of projects that only worked when the prices went up are finally brought to light. In the long term, tokens with strong use cases and utility will survive – as they did in the previous bear markets. But some companies within the space have had unsustainable business models and now present a contagion risk.
So Bitcoin is hit with a double whammy and it is more than likely that we are going to see sub-$20K prices soon. Some are calling for $12K – and while this can happen, we think that this price tag has a relatively low probability for now. Today, all is in the hands of the Fed. A 75 basis point rate hike would likely take us to $16-18K. On the other hand, a 50 basis point rate hike could result in a substantial bounce – likely to the $24K resistance levels.”
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