• The Fed’s interest rate spikes have had a significant impact on the prices of speculative assets including bitcoin, which has fallen at nearly twice the rate of the stock market.
• According to crypto research giant Kaiko, the volatility of the cryptocurrency market has dropped below standard market benchmarks, which some view as a sign of consolidation and a potential bottom.
• Luno exchange head Vijay Ayyar has expressed optimism that the range-bound nature of bitcoin’s price between $18-25K indicates that it may have already bottomed out.
The Federal Reserve’s recent series of interest rate hikes have had a significant impact on the prices of speculative assets, with bitcoin being one of the hardest hit. As the US dollar strengthened and more attractive fixed-income assets distracted investors, the once-touted non-correlative asset has seen its beta well past one as its price has dropped at nearly twice the rate of the struggling stock market.
Recently, bitcoin has been stagnating below $20,000, leading some to fear that the coin may simply be butting up against a previous support floor and that any additional bad bitcoin news will cause a further drop. However, others are more confident in the coin, viewing the consolidation as a sign of a bottom and a strong future.
To support this optimistic thesis, the crypto research giant Kaiko recently reported that the volatility of the $201B cryptocurrency market has fallen below standard market benchmarks. This is seen as a harbinger of solid consolidation, and some view it as the best news of the year.
Vijay Ayyar, head of the Luno exchange, has also reinforced the idea that the range-bound nature of bitcoin’s price between $18-25K indicates that it may have already bottomed out. Whether it 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 this could be the case.
Ultimately, the future of bitcoin will depend on the market’s response to various macroeconomic factors, as well as any additional news regarding the coin. Although calling the bottom (or the top) is as much art as science, it appears that the bitcoin market is slowly stabilizing, and this could be a sign of a strong future.