• The Fed’s interest rate hikes have caused a negative effect on the cryptocurrency market, with Bitcoin’s beta being well past one as it falls at a rate nearly twice that of the stock market.
• Some are cautiously optimistic that the current consolidation is a strong sign of a bottom, and a harbinger of solid consolidation even as a stronger US currency and more attractive fixed-income assets distract investors.
• According to Luno exchange head Vijay Ayyar, Bitcoin has been range-bound between $18-25K for four months now, indicating consolidation and a probable bottoming out pattern.
Recent interest rate hikes by the Federal Reserve have caused a significant downturn in the cryptocurrency market, with Bitcoin being one of the hardest hit assets. While once touted as a non-correlative asset compared to equity markets, it’s clear that is no longer the case, as Bitcoin’s beta is well past one and it’s falling at a rate nearly twice that of the struggling stock market.
Currently, the coin is stagnating below $20,000 and many fear that any additional bad news will cause a further drop. However, there are some who are more confident in the coin. They believe that this consolidation is a strong sign of a bottom, and that the support making Bitcoin range-bound is a sign of a strong future. Crypto research giant Kaiko has reported that the volatility of the $201B cryptocurrency market has fallen below standard market benchmarks, which is a harbinger of solid consolidation, even as a stronger US currency and more attractive fixed-income assets distract investors.
Luno exchange head Vijay Ayyar has reinforced this thesis, saying that “Bitcoin has largely been range-bound between $18-25K for four months now, indicating consolidation and a probable bottoming out pattern, given we are seeing the Dollar Index top out as well.” He believes that this stability is the best news of the year, and that the consolidation is an indicator of future stability or moves upward rather than further crashing.
Whether or not Bitcoin will shoot back up to close to its previous all-time-high of nearly $70,000 remains to be seen, but many are cautiously optimistic that it will. Calling the bottom (or the top) is as much art as science, with a healthy dose of luck, but the current consolidation may be a sign of a strong future for the coin.