It’s been a cold and hard crypto winter. But signs of a thaw, spurred by global monetary chaos, are starting to show.
Bitcoin surged to its highest level in more than a week on Tuesday, gaining more than 5% as the pound sterling and other currencies trailed against the ultra-strong dollar.
The gains gave hope that bitcoin was becoming a safe-haven asset, or one that acts as a hedge when stocks are falling.
Then, around noon, the dollar rallied sharply and bitcoin fell again, wiping out all of its recent gains. This Wednesday, after the Bank of England tried to bolster the UK’s debt, Bitcoin fell by around 1%.
When the dollar is strong, “there are no safe havens,” warned Glen Goodman, cryptocurrency advisor eToro, on CoinDesk TV on Tuesday.
Bitcoin is struggling for direction: The digital currency has been hovering between $18,000 and $25,000 since mid-June after a major crash wiped nearly $2 trillion off the cryptocurrency market.
Currently, the fall is 60% in the year.
The currency soared during the Covid era on the wings of near-zero interest rates, stimulus money and a large influx of investors from large-scale institutions and hit a record high of nearly $70,000 in November.
So central banks started raising rates to fight inflation, and the dollar strengthened significantly, enticing investors as the last safe haven.
At the same time, the economy began to sour and new investors who still saw bitcoin as a risky asset left in droves.
The drop caused a wave of bankruptcies among young companies like cryptocurrency trading platforms Voyager and Celsius.
“In the current macro climate, when you have inflation and a huge sell-off and big crypto projects that have failed, people are going to back off,” Tyler Winklevoss, co-founder of cryptocurrency exchange platform Gemini, told me in an interview. earlier this month.
“Bitcoin is still new, so it is still seen by many as a risky asset. And as people take risk off the table, bitcoin will suffer. But all assets are suffering, bitcoin is not alone in this.”
But even as bitcoin prices plummet, investors see signs of an upcoming bottom.
Ben Gagnon, director of mining at Bitfarms, sees anything below $20,000 as the price at which good-time institutional investors withdraw from the coin for good, which will help stabilize bitcoin’s current volatility and send it to an upward path.
As of Wednesday morning, bitcoin was below $19,000.
“I would be very surprised if we ended the year so low,” Gagnon said. “I think Bitcoin is going to start to recover now that it’s kind of shaken up with a lot of the excess.”
“This is an interesting time,” said Chris Kline, COO and co-founder of Bitcoin IRA, a digital asset technology platform.
“For the past eight months, bitcoin has been acting like a tech stock because there are so many institutional investors in it.” As that money flows in, he said, things could change.
That’s for the future, but bitcoin advocates remain cautiously optimistic.
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.
