Bitcoin bounced up from $20K, but lack of reasons for a rally
Bitcoin was down 0.7% on Wednesday, ending it near $21.8K, although it was a hair away from $20K in the first half of the day.
Ethereum gained 5% in the past 24 hours, losing 35% in 7 days. Altcoins from the top 10 are growing ahead of the curve, rising between 7% (BNB) and 18.6% (Solana). The top altcoins are behaving better than the flagships (ETH, BTC) this week, as they have fewer institutions and crypto enthusiasts find them relatively stable and still cheap.
Total crypto market capitalisation, according to CoinMarketCap, added 5% overnight to $0.94 trillion. The Bitcoin dominance index declined 0.6 points overnight and 2.2 points in 7 days to 44.3%.
By Thursday, the cryptocurrency fear and greed index remained unchanged at 7 points (“extreme fear”).
It isn’t easy to rely on the resulting rebound as it is not due to easing financial conditions. Bitcoin’s recovery to Tuesday’s levels looks like a technical bounce after a quick collapse. Yesterday, financial markets received the fastest monetary policy tightening in almost 30 years, which has hardly added to the appeal of cryptocurrencies for the foreseeable future.
Investors and traders should be prepared that yesterday’s rebound could choke out rather quickly. We need to be ready that cryptocurrencies and risky assets in financial markets are unlikely to reliably bounce back before there are signals that the economy has stopped slowing. The Fed is no longer tightening its rhetoric.
Despite the massive fall in the crypto market, MicroStrategy CEO Michael Saylor continues to express confidence in bitcoin’s growth. He said the company is safe, has enough collateral for its loan, and could survive a BTC’s fall as low as $3562. MicroStrategy has already lost more than $1.2 billion due to the decline in BTC.
According to a Bank of America survey, 90% of Americans plan to buy cryptocurrencies in the next six months.
According to market veteran Peter Brandt, people are willing to buy anything in the hope of an “ace” but end up losing their hard-earned money.
Author
Alexander Kuptsikevich, a senior market analyst at FxPro, has been with the company since its foundation. From time to time, he gives commentaries on radio and television. He publishes in major economic and socio-political media.
