Bitcoin Seen Dropping To $22K As Bear Market May Linger For A While


With stocks dropping and inflation rising, cryptocurrencies seem to be following suit.

In the past six months, Bitcoin, the largest cryptocurrency by market capitalization, has lost about half its value.

Currently, Bitcoin is selling at an average price of $29,700, and Glassnode has recorded an outflow of about $1.3 billion, with a net offload of nearly $700 million.

Ether, the second largest cryptocurrency, has lost more than 55 percent of its value. This does not even begin to address the TerraUSD scandal and its aftermath.

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Last week, crypto assets under management (AUM) reached its lowest level since July 2021.

This was a result of the current price declines in the cryptocurrency and stock markets, which were partly driven by the US Federal Reserve’s decision to begin cutting its balance sheet this month.

Bitcoin at an inflection point

A senior market expert at Bloomberg Intelligence warned that Bitcoin is at a so-called “inversion point,” which indicates that the cryptocurrency is positioned on a curve where it may rise or fall.

Part of the uncertainty that drives investors to avoid risky assets like cryptocurrencies is undoubtedly due to higher interest rates.

With interest rates rising, technology stocks and cryptocurrencies were hit hard.

According to Yash Patel, general partner at Telstra Ventures who invests in the crypto business, larger institutional players have expanded their cryptocurrency business over the past several years.

As interest rates rise, it becomes less desirable to borrow money to make these transactions.

At the moment, cryptocurrency is tied to the markets, which many believe is not good for investors in the near term.

BTC total market cap at $565.76 billion on the weekend chart | Source: TradingView.com

‘Very bad’ predictions for cryptocurrency

Joseph Edwards, head of financial strategy at investment management firm Solrise Finance, said his outlook is “too poor” for bitcoin and cryptocurrencies in general.

“There isn’t a lot of new funding flowing into the markets, which is always a prerequisite for market expansion,” he said.

For her part, Vice Chairman of the Federal Reserve, Lyle Brainard, indicated that the market may consolidate and eventually decline, which could lead to a decline in the price of Bitcoin from $ 22 thousand to $ 24 thousand.

Bear market here for a while

Brianard indicated that the price of Bitcoin may retreat near its price support area before declining, which indicates that the downtrend may continue.

Meanwhile, a blockchain and cryptocurrency industry insider told CNBC that the recent slump in the cryptocurrency market could help eliminate “bad actors” from the market.

“We’re seeing a bear market,” Web3 CEO Bertrand Perez told CNBC at the World Economic Forum in Davos, Switzerland.

“I think that’s a good thing,” he said, “because it would exonerate the people who were there for the wrong reasons.”

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Featured image from Cointribune, chart from TradingView.com



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