Bitcoin Heading To $17,500 – Is Now The Time To Invest Or Wait For Lower Entries?
- Bitcoin is on the move, with the price possibly reaching above $17,500 as the crypto market shakes off the impact of the FTX contagion on the industry.
- In its latest weekly institutional note, Coinbase noted that the overhangs of the negative sentiment of recent weeks are receding.
At the start of the year, selling risky assets such as stocks and Bitcoin and buying USD against other currencies were the most popular activities among investors and brokers. However, market participants are currently reassessing their commitment to the supposed “hawkish” Federal Reserve trades and returning to riskier assets. As investors begin to disregard the Fed’s stance on the economy, they are now targeting investments in risky assets other than BTC.
The high inflationary sentiment and the Fed’s talks about moderation in raising interest rates in December have been the reason for this sudden shift. For the first time in 7 months, Wall Street’s benchmark, the S&P 500, rose 16 percent in one month to trade ahead of its 200-day moving average. Similarly, the fiat pair, USD/JPY, fell 11 percent in its 200-day moving average, with the USD index falling to its lowest in months.
US government bond yields fell sharply from their previous highs at the start of the year, thus confirming peak inflation sentiment and risk amplification in equity and currency markets. However, Bitcoin seems to have detached itself from the macroeconomic actions as it is currently trading at $17,340.
Thus, the recent FTX collapse comes at a worse time for the broader crypto market and, by extension, Bitcoin. According to Markus Thielen, the principal researcher at Matrixport, US stocks and cryptocurrency have had a strong relationship. He said:
The stock and crypto markets have historically operated side by side. …Without the FTX debacle, BTC could have traded at $29,000 instead of today’s estimated $17,200.
Thielen added that if the crypto market manages to shake off the FTX contagion, Bitcoin could start trading at $29,000. The asset witnessed a two-year price drop after Bitcoin’s fall to $15,480 in November. The market has continued to feel the impact of the steady decline in the value of the largest crypto asset.
The waning FTX contagion
With Bitcoin’s recent market performance, it appears that the industry is starting to put the worst of the FXT crash behind it. Over the past week, BTC gained 4 percent despite the latest bankruptcy filing by crypto lender BlockFi. In its latest weekly institutional note, Coinbase noted that the overhangs of the negative sentiment of recent weeks are receding.
Therefore, the industry is witnessing a less noticeable effect of the FTX insolvency. However, the Coinbase statement explained that the crypto market has yet to assess the full extent of the uncertainty. For Bitcoin, the recent recovery suggests that the height of the FTX panic has faded.
With investors having confidence in BTC, more investment in the asset will increase investor confidence in the broader crypto market. Investors are now deciding whether to invest or wait for the token to reach a new low before making a move.
Meanwhile, famous Bitcoin advocate and investor Max Keizer shared similar sentiments to Coinbase’s recent comments on BTC’s price movement and investor sentiment in his latest tweet.
Record high investments in #BTC the network comes from high conviction investors who see BTC as the perfect money to replace trillions of archaic, government fiat. Attacks on BTC increase the conviction. BTC is designed to be attacked. It increases conviction, hash rate, security and price pic.twitter.com/O9SPY5pUTZ
— Max Keizer (@maxkeiser) 5 December 2022
Keizer tweeted that the record high investment in the bitcoin network is evidence of investors’ renewed confidence that the leading digital asset can truly act as an inflation hedge against fiat. He further said that the attacks on BTC will increase hash rate, conviction, security and price.
