"The Bottom is Near." What will affect the bitcoin rate in the near future
Bitcoin rate updated a two-year low. On the night of November 21-22, the quotations of the cryptocurrency fell to $15,400 for the first time since November 2020. During the day, the first cryptocurrency recovered slightly, at 17:30 Moscow time the coin is trading at $16.1 thousand. Its capitalization in the past 24 hours has decreased by $1 billion and amounts to $310 billion.
What is the reason for bitcoin falling to its lowest rate in two years
Experts attribute the decline in rates of cryptocurrencies to internal problems of the crypto market, as well as the global economic difficulties.
One of the main factors of BTC price decline was the statement of cryptocurrency broker Genesis about the possible bankruptcy The reason for Genesis problems, in turn, was the collapse of FTX and the connection with the investment company Grayscale.
Grayscale Investments is an American company founded in 2013 by Barry Silbert, owner of the venture capital firm Digital Currency Group, which also owns Genesis Global Trading Investment Bank and CoinDesk. Grayscale created the Grayscale Bitcoin Trust (GBTC), which was the first regulated instrument to allow institutional investors to invest in bitcoin.
GBTC has about $10.5 billion in total assets managed. Due to problems in the crypto industry, market participants demanded that Grayscale provide transparency about its assets, but citing security concerns, the company did not fully disclose information, but provided a letter from Coinbase confirming the safety of the funds and their quantity.
As the market reacts sharply to the troubles of Genesis and the Grayscale trust, Coinbase's bond yields may also be in trouble. The coupon yield on these securities is 3.625%.
Coinbase shares were down more than 10% in trading on Monday, November 21, and hit an all-time low of $40.61.
Against the background of bad news from cryptocurrency companies, the market was gripped by panic: even whales began to sell their coins in large volumes. In addition, bitcoin sales are also provoked by miners, who sell mined coins.
The need to cover costs has led to a sharp increase in sales by miners. The profitability of mining continues to fall both because of the decline in cryptocurrency rates, and because of the increasing complexity of mining the first cryptocurrency.
And all this is happening against the backdrop of problems in the global economy, which has slowed its growth rate.
Central banks are likely to raise rates only in the first quarter of 2023, as inflationary pressures weigh heavily on the economy.
What factors are likely to affect rates in the near term
The drop in the dollar index, as well as rising stock markets due to slowing inflation, are supporting bitcoin. So, it is not possible to say that the cryptocurrency is only exposed to the downside, he adds.
The cycle of decline in the crypto market began long ago, and the consequences of potential bankruptcies of other exchanges and cryptoprojects, in general, are already embedded in the prices of the most capitalized cryptoassets.
On the other hand, the fall of the market, primarily bitcoin and Ethereum, is actively redeemed by major players, as can be clearly seen in the dynamics of changes in the volume of addresses. The chances that a potential bottom is near are growing by the day.
The positive news and decreased panic on the market may lead to higher rates, thinks the CEO of RBK Trading LTD. However, he drew attention to the fact that the stock market reports in 2023 are expected to reduce company profits, which could lead to pressure on the markets, including the cryptocurrency market.
Three scenarios
The cascade of bankruptcies now being observed is worsening the situation in the market. In his opinion, once the panic subsides, the market will slow down and enter a consolidation movement.
As a realistic prediction, the expert called the bitcoin correction to the level of $14 thousand and the subsequent accumulation period.
A positive development, according to the specialist, will be bitcoin holding the psychological level of $15 thousand with a false breakthrough. Then the price will go back to the levels of $20K-$22K, after which the asset will enter the accumulation zone and further will approach $25K.
The expert described the VTS falling below the psychological level of $14 thousand against the background of the general panic, after which the price of the coin will drop to $12 thousand. If this level is broken through confidently, the price will accelerate to $10 thousand, the asset will fall into the zone of maximum oversold, and then you can think about the formation of positions, said the expert.
Final wave of falling
The price dynamics of the last months will be an element of the "macro bottom" in the future, and now BTC lacks a final wave of falling with a target of $14 thousand or $13 thousand. According to the analyst, such a wave will lead to the capitulation of a large number of players and open the prospect for further price recovery.
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