Tue, February 07, 2023

Perspective for Bitcoin as Interest Rates Growth

2021 - Crypto Winners and Losers

Investors are observing tense developments between Ukraine and Russia. Hence, the Bitcoin narrative could be checked this week. In parallel, assess the possibility of raising interest rates on the Federal Reserve by 50 basis points in March by 0.5 percentage points. In terms of market capitalization, investors have long regarded Bitcoin as a haven asset. It ideally hedges the risk in investor portfolios and limits adverse shocks. However, in recent months, Bitcoin has been traded as shares; Namely, as more risky growth-oriented stocks. It recovered again after a significant fall at the beginning of the year; When rising rates forced investors to leave positions in both technical and other risky assets.

Analysts say some have named Bitcoin as a stateless currency. Accordingly, there should be an increase in demand for this currency as a haven. However, it is worth noting that the change in landscape made Bitcoin fragile due to the volatility of the US stock market. Consequently, Bitcoin investors may not feel at ease until the situation on the Russian-Ukrainian border is settled.

According to the data, the price of Bitcoin fell by almost 10% during the year. Meanwhile, the all-time high of November was down about 38%. Technical and growth stocks should remain suppressed for some time. This means that the crypto winter can last for several more months.

According to the founder of Fairlead Strategies, the resistance level of Bitcoin should remain at $46,730 this week. Experienced crypto-investors are rarely intimidated by long low periods. It is worth noting that the currency has only experienced one crypto winter before. In 2018, its price fell by about 80%. Since then, the market has developed significantly.

Bitcoin and Geopolitical Tensions

Difficult times are when the industry needs to build infrastructure and applications to make it easier for the newcomer to the next wave in the future bull market. There is great interest in new sectors of cryptocurrency that go beyond Bitcoin.

Experts say interest and money in NFTs will increase in 2021. Most people still perceive them only as digital art. People are also ignoring other potential uses for NFTs. For example, the NFT of the House Deed can provide a history of property ownership. NFT medical records can offer patients a safe way to share information with physicians. Despite new interest in DeFi, it is still premature and underdeveloped to raise it. DeFi allows users to participate in lending and other financial activities using blockchain. This can be done without any intermediaries. Infrastructure is still under construction. It wasn’t easy to buy Bitcoin until 2013-2016. However, companies like Coinbase have made it easy. Developing DeFi takes time. Due to the prolongation of the Bitcoin cycle and the reduction of returns, these other assets play a significant role in increasing crypto uptake.

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