Another Red Daily Close Puts Bitcoin Below $23,000, Is Recovery Expected?


Bitcoin saw another red daily close after a massive rally from last week. This has now wiped out most of the gains made during this time period and left the digital asset struggling below $23,000 again. Momentum quickly faded as news of the recession settled. Its viability as an inflation hedge is again called into question given its performance so far this year.

Is Bitcoin still a good bet?

Bitcoin being an inflation hedge, it has been one of the selling points of the digital asset. This is due to its year-on-year performance compared to other financial markets in similar time frames. As these financial markets, like the stock market, weren’t able to keep up with the high rate of inflation, investors naturally flocked to bitcoin as annual returns outpaced inflation.

That is, until a bear market where Bitcoin’s performance as an inflation hedge begins to shake up. An example of this is the bear market that is currently being experienced in the market. This drop resulted in digital assets losing about 44% of their value during this time, and inflation continued to reach its highest levels in 40 years. But on a monthly basis, bitcoin has outperformed prominent markets like the S&P, giving credence to its ability to deliver reasonable returns even during a bear market.

Bitcoin price chart from TradingView.com

BTC sees another red daily close | Source: BTCUSD on TradingView.com

Bitcoin is up more than 20% in the past month, while the S&P is up just 8%. But on a year-over-year basis, the market is down significantly less than Bitcoin by 5.8%. So while bitcoin has proven to be a good bet when it comes to inflation hedges, it remains an option for investors with a high appetite for risk.

Market sentiment points to recover

The crash of the cryptocurrency market in June deepened the market sentiment in the area of ​​intense fear. This will continue for two weeks as cryptocurrency prices struggle to regain their lost value. However, it could change quickly when Bitcoin saw a rapid recovery in its price back in July.

Bitcoin is back above $24,000 again and this has once again sparked confidence in the hearts of investors. Sentiment had recovered along with price and at the end of the month had grown to a high score just under 30 on the Fear & Greed Index. This result still puts her in the fear zone but it was a noticeable recovery in sentiment.

Now, even with the pullback, the data shows that investors are still maintaining positive sentiment towards digital assets like bitcoin. The only thing that positive emotions drive is accumulation, and accumulation leads to recovery. Bitcoin just needs to hold above the $22,700 support and close higher to bounce back above $23,000.

Featured image from Outlook India, chart from TradingView.com

Follow Best Owie on Twitter For market insights, updates, and sometimes funny tweets…





Leave a Comment

Your email address will not be published.