Like the little Coinbase QR code being tossed around in the bezel of your TV during the Super Bowl, the Bitcoin price has been stuck in a fixed range.
Like the little Coinbase QR code tossed around in the bezel of your TV during the Super Bowl, Bitcoin price has been stuck in a tough trading range for months. Some market watchers have theories about what could happen.
Consider this explanation: long-term investors are rushing in whenever prices drop, according to Brett Munster at Blockforce Capital. “This group of market participants has repeatedly been willing to enter and accumulate coins at this lower price, thus setting the floor for Bitcoin over the past few months,” he wrote.
On the other hand, short-term holders are underwater as long as Bitcoin stays below $47,000 and most are currently holding their coins at a loss. “Every time we start hitting that mark, it seems like selling pressure will increase as investors get excited about getting their initial investment back,” said Munster, data analyst at Glassnode. them,” said Munster, a Glassnode data analyst.
Result? Bitcoin is clinging to the $32,000 to $47,000 range, which is proving difficult to break out of.
Matt Maley, director of market strategy at Miller Tabak + Co., also sees this trend. “The long-term players are keeping prices below the market,” he said. “However, a lot of people who bought Bitcoin last year are underwater. They seem to be using each bounce as an opportunity to take some chips off the table with a lot of uncertainty surrounding its ability to be an inflation hedge.”
Cryptocurrencies, like many other risk assets, have been slowly losing their luster in recent weeks as global central banks have begun to raise interest rates and Russia’s war with Ukraine has everyone on edge. Bitcoin, the largest digital asset by market value, has lost 15% since the start of the year and is down about 40% since its November record high.
Chris Gaffney, president of world markets at TIAA Bank, said there is a group of crypto investors that have been buying the coin for a long time, they have seen huge returns, and they are not trading or selling it.
“People who bought it cheaply and are making big profits are going to sit on it,” he said by phone. “But then traders, if they buy cheap and it runs out, they sell and they keep it in that range.”
Cryptocurrency prices are for the most part reflective of the US stock market, where worries about the war in Ukraine, waning growth prospects and soaring commodity prices are dampening sentiment. . Investors have slashed many of their risk bets, including in the digital asset market, despite the long-awaited crypto regulatory order from the Biden administration being celebrated on Wednesday. with a big rally.
But despite the better-than-expected news surrounding the executive order, “crypto spot performance overall remains directionless,” said David Duong, head of institutional research at Coinbase Global Inc., Write. lower and “we typically use as a measure of risk for crypto assets more broadly,” he said. “What it seems to be telling us is that the perceived ‘safe haven’ risk appetite for the asset class is still a bit low.”
Meanwhile, Kraken is seeing buying interest from both retail and institutional investors, according to Juthica Chou, head of OTC options trading at the crypto exchange. Some of the more active institutional investors may be making opportunistic moves. “These moves, when you’re up 8%, down 8% show a lot of opportunity,” she said on Bloomberg’s “QuickTake Stock” broadcast. “The other side is that some institutions are accumulating over time and looking at some of these entry points.”
Chou added that there is still a lack of catalysts to drive investments deeper into the space. Although some investors are participating right now, there is still a lot of global uncertainty, so some participants will keep their funds in cash until a positive catalyst is present.
