Why the massive bitcoin and crypto price pump may just be getting started
BitcoinBTC and cryptocurrencies have soared higher this week, climbing along with stock markets as traders feel the aftershocks of a major earthquake.
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Bitcoin price has come within touching distance of $20,000 per bitcoin for the first time since FTX’s shock collapse, up nearly 20% since this time last week (although these smaller cryptocurrencies are leaving it in the dust).
Now, as the closely watched Bitcoin & Crypto Fear and Greed Index climbs to its “greediest” point in four months, traders are asking how far this bitcoin price rally will go and whether the decline that has seen $2 trillion wiped from the combined crypto market may finally be above.
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“The short-term outlook for bitcoin appears bright as the recent breakout from $18,000 is likely to call some technical traders back into the market,” Yuya Hasegawa, crypto market analyst at Tokyo-based Bitbank, said in emailed comments, pointing to rising expectations. Cooling inflation will mean the Federal Reserve slows the pace of its planned rate hikes.
“It was also a bit of a surprise and a relief that Fed Chair Jerome Powell refrained from mentioning details of future monetary policy in his speech in Sweden this week and did not take a stab at the market’s somewhat premature hopes for slower rate hikes.” Hasegawa added, however, warned Fed officials could hit the market again — “a recurring pattern since late last year.”
The Bitcoin price suffered massive losses throughout 2022, exacerbated by the collapse of various crypto companies and culminating in the implosion of the major crypto exchange FTX.
Over the past two years, however, there has been bitcoin adoption on Wall Street, with some of the biggest financial giants beginning the slow process of entering the bitcoin and crypto markets.
“It is often forgotten that institutional investors have significant lead time when taking bitcoin positions,” Tycho Onnasch, founder of institutional bitcoin lending protocol Zest.
“Many institutional investors who became interested in taking a bitcoin position during the 2021 frenzy have now finally completed their internal processes enabling them to start trading bitcoin. Institutions can’t just fire up Coinbase and make 7- digit market buy bitcoin anytime bullish news. They have long processes of setting up custody, finding brokers, setting up execution management systems and more that make their moves possible.”
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Meanwhile, others expect the flow of institutional investors into bitcoin to continue this year.
“We will see continued use of bitcoin and crypto in traditional banking and finance,” Alex Adelman, CEO of bitcoin rewards app Lolli, said in an emailed comment.
“Industry leaders launching crypto services in 2022 such as BlackRock, Fidelity and more set a new crypto-forward precedent for Wall Street that will spur competition among traditional institutions to launch a growing suite of crypto products and services.”
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