Despite Bitcoin’s 70% Rally, “Historical Undervaluation Remains”, Crypto Analyst Explains
The latest edition of the Capriole Newsletter, authored by Charles Edwards, co-founder of digital asset management firm Capriole Investments, spotlights the ripple effect of recent turbulence in the traditional financial system on the world of Bitcoin and the broader crypto market. .
Issue #30 of the newsletter, which came out earlier today, uncovers the complex implications of the sensational collapse of three US banks, the exciting challenges facing Credit Suisse, the controversial policy of quantitative easing (QE) implemented by the Federal Reserve, and far-reaching impact of US regulatory actions against crypto businesses. The newsletter emphasizes the seriousness of the situation, “The recent collapse of three US banks highlights the fragility of the current financial system and underscores the need for a decentralized alternative like Bitcoin.”
As the financial landscape shifts due to bank failures, the weakening of the US dollar and global de-dollarization, Edwards offers a deep dive into the possible consequences for Bitcoin’s performance and the ever-evolving interest of investors. He sheds light on the optimistic developments in the crypto industry, such as the long-awaited launch of Fidelity Crypto and Microsoft’s attempt to test a crypto wallet in the Edge browser.
Edwards astutely observes that Bitcoin’s recent price rise has been fueled by organic spot buying, indicating a lack of speculation and suggesting that the bull cycle is only in its infancy. A thorough analysis of various metrics, including Bitcoin production cost, energy value and macro index, provides a well-rounded understanding of the current state of the market. As his report claims, “The absence of speculation in the current Bitcoin bull cycle is a strong signal that the market has not yet peaked and there is still plenty of room for growth.”
Edwards reveals three potential liquidity crises that could leave a lasting mark on Bitcoin: US bank runs, global de-dollarization, and the ominous “Operation Choke Point 2.0,” which he claims is a targeted attack on legitimately operating crypto businesses. Edwards argues that these crises expose the need for an alternative financial system, with Bitcoin poised to play a central role. “Global dedollarization is an ongoing process that is likely to accelerate as more countries try to reduce their reliance on the US dollar, and it could have a significant impact on Bitcoin and the broader crypto market,” the newsletter highlights.
In an effort to demystify potential liquidity crises, the newsletter carefully examines various scenarios and their potential implications for the crypto market. It also delves into how these crises can offer golden opportunities for investors to take advantage of the resulting market dynamics.
For example, the newsletter speculates that a significant shift toward global de-dollarization could dramatically increase demand for Bitcoin as a store of value and medium of exchange, driving its price skyward and creating a positive feedback loop as more investors and institutions seek to diversify their holdings. “Institutional investors are playing an increasingly important role in the Bitcoin market as they seek to hedge against currency risk and capitalize on the unique characteristics of this emerging asset class,” the newsletter points out.
The newsletter also navigates the intricate regulatory landscape surrounding cryptocurrencies, discussing recent regulatory actions against crypto businesses and their potential impact on the industry. While regulatory scrutiny is expected to intensify, the newsletter claims that the long-term outlook for Bitcoin and the crypto market remains bright, as these measures could lead to a more robust infrastructure and strengthened investor confidence. “Regulatory measures against crypto businesses may create short-term challenges, but they are likely to strengthen the industry in the long term by promoting a more transparent and secure environment for investors,” the report said.
Finally, the newsletter points to key trends in the broader crypto market, such as the growing popularity of decentralized finance (DeFi) and the rapid rise of non-fungible tokens (NFT). These ground-breaking innovations are seen as harbingers of the limitless potential of blockchain technology and its capacity to upgrade traditional finance. “DeFi and NFT are just the tip of the iceberg when it comes to blockchain’s potential to revolutionize various aspects of our lives. As the technology continues to mature, we can expect to see further innovation and adoption across a range of industries,” the newsletter said.
Image credit
Featured image via Pixabay
