Bitcoin Bounces Back. Will Crypto Rally To The Moon?
The Crypto market has been in a bearish trend since 2022, clinging to the lowest support levels of 52 weeks. Things seemed dead for Bitcoin and Altcoins with the collapse of FTX, wiping nearly $8 billion into thin air.
Solana, Binance coin, and Ethereum were worst affected by the collapse, and the overall market cap of the Crypto market reached its lowest value of $0.8 trillion!
With positive news of the new year from the market, related to the US Feds Job number report, the recovering market of China after 3 yrs of covid restrictions has created a conducive fuel for a bullish crypto market.
The current Bitcoin price at the time of writing is around $23,000 and hangs around this resistance that previously seemed enormous to climb. Whenever Bitcoin seemed dead, it bounced back ferociously like a silent Tiger, proving its strong resilience.
So, the question for all investors is, will Bitcoin continue to rise and reach a new all-time high? Should we buy Bitcoin now? Are bulls back in the crypto market?
Knowing the market trend:
#1 Easing Inflation, Sacrificing Economic Growth in the USA:
In 2022, the feds raised interest rates each time by 75 bps (0.75%) to get the target inflation rate down to 2%. Controlling inflation makes a stable supply and demand cycle in the market. On the flip side, it sacrifices market growth and induces a recessionary setup at a global level that is visible by falling stocks of tech giants and mass layoffs in jobs.
The upcoming FOMC meeting on 31st January and 1st Feb anticipates more rate hikes, but not intense compared to the previous 75 bps hike.
#3 Technicals speaking the truth and Economic cycle of Crypto:
Bitcoin has shown a parabolic trend, making the price super bullish over the weeks and consolidating around $23,000. If Bitcoin stays in the price zone of $23,000, we might see Bitcoin climbing to the next higher price of $25,000.
The market trend seems bullish on the monthly frame and may form a bullish engulfing candlestick if the price stays stable around current levels. However, with super-extended bull runs, investors anticipate short-term market correction to adjust their earnings leading to a price drop of 10–15% in the overall market.
#4 Cryptocurrency Used as Potential Hedge Tool Against Fiat Currency:
From the experience of the economic collapse of Sri Lanka in 2022 and Pakistan's current days, many investors believe fiat currency (Daily currencies such as INR ₹, USD $, EURO €, …) has value only under the faith of stability and belief of central authority.
The gold standard of valuation was abolished in 1970’s in USA. Underlying value for money lies only because of people’s trust in US Dollar, Euro, INR and all other national currencies.
In this case, Bitcoin and Cryptocurrency being decentralized provide a platform where no ruling power can manipulate prices.
For one living in Sri Lanka, Pakistan and Economically weaker countries, Bitcoin and Commodity assets have been the best way to hedge the currency depreciation and unstability risk because the deflationary environment provides strong safety against centralized fiat currency and economic unstability.
El Salvador’s currency colón became instable during 2001 and got replaced by US Dollar as a legal tender. Due to experiencing depreciating and unstable centralized currency risks and to hedge against global inflationary risk, El Salvador made Bitcoin their legal tender and official currency. Though Bitcoin has little stability, it is certainly a smart move in the long term!
The Final Line:
The market always trades on uncertainty which drives the price range to either bullish or bearish. From the overall setup, the Crypto market is beginning to revive from the long winter, and the economic cycle is changing seasons in the long term.
Despite suffering significant price drops in 2022, the market believes in the resilience of Bitcoin and Key Altcoins to break all resistances and make way for the next bull run over the long term.
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