Bitcoin Flirts With Hurdle At $24k, Why It Could Be In Early Days Of Recovery
29 Juli 2022 - 07:24PM
NEWSBTC
Bitcoin continues to trend to the upside over the short term as the
crypto market hints at further gains. The bullish momentum seems to
be driven by the positive earnings seasons and the U.S. Federal
Reserve (Fed) interest rates hike. The financial institution
announced a 75 basis points (bps) increase in interest staying
within market expectations. Bloomberg Intelligence’s Senior
Commodity Strategist Mike McGlone believes the Fed might have
marked the pivot for Bitcoin. By staying within market
expectations, the financial institutions might give room for the
bullish trend to expand in the coming months. The Fed has been
trying to mitigate inflation in the U.S. dollar, as measured by the
Consumer Price Index (CPI). This metric stands at a 40-year high
but seems poised to trend downwards. The Bloomberg Intelligence
analyst claims the price decrease across the commodities sector
hints at this possibility and could provide the Fed with the
support to “lighten the rate hike sledgehammer”. This would benefit
stores of value assets, such as Gold, U.S. treasury bonds, and
Bitcoin. The cryptocurrency has been suffering, McGlone argues
because it’s deemed a nascent asset with relatively new technology.
This disadvantage might fade into the background as Bitcoin’s
adoption curve increases versus its total supply. As seen below, if
the cryptocurrency follows the internet’s adoption curve, it could
record over 1 billion users by 2025. In the short term, BTC’s price
might benefit from mitigation in the macro-economic factors playing
against it. The next major event will be July’s CPI print to be
announced in August, which might result in more fuel for the
current bullish price action. McGlone wrote: (Fed’s) “meeting by
meeting” comment may mark the pivot for #Bitcoin to resume its
tendency to outperform most assets. New and untested are becoming
past tense fast for the benchmark crypto, likely in the early
recovery days from a severe drawdown. Can Bitcoin Resume Its
“Propensity To Outperform”? Further data provided by McGlone shows
a decrease in BTC’s price 250-day volatility versus the Bloomberg
Commodity Spot Index. As seen below, whenever this metric trends
downside, the price of Bitcoin reacts moving in the opposite
direction. A decline in BTC’s price 250-day volatility marked the
beginning of the 2012 and 2017 rallies. In that sense, McGlone
pointed out: The lowest-ever Bitcoin volatility vs. the Bloomberg
Commodity Index (BCOM) may portend a resumption of the crypto’s
propensity to outperform (…). If history is a guide, Bitcoin
volatility is more likely to recover vs. commodities when the
crypto heads towards new highs.
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