As a seasoned researcher with over two decades in the financial markets under my belt, I have seen countless market fluctuations and cycles. The recent drop in Bitcoin (BTC) has reminded me of the old adage: “What goes up must come down.” However, this correction should not be cause for alarm but rather an opportunity to reassess our investment strategies.
As a researcher, I observed that Bitcoin (BTC) dipped 4.1% from Oct. 21 to Oct. 22, with a roadblock at $69,500 causing this decline. This dip erased the weekly gains we had seen earlier, leading me to ponder if the $67,000 mark can be recuperated and what elements may foster a price rebound.
It seems that the drop in the S&P 500 from its peak on October 18 may have made Bitcoin investors more wary. Yet, the primary causes leading to the stock market downturn generally benefit alternative investments. For example, Gold reached a record high on October 22.
Bitcoin will benefit regardless of the US presidential election outcome
Paul Tudor Jones, a wealthy investment manager, stated on October 22nd to CNBC that the U.S. government is likely to persist in an inflationary course, irrespective of who takes office in the White House. In such a situation, he advises investing in gold and Bitcoin, as he believes that many investors are significantly underinvested in commodities.
Tudor Jones predicts that the U.S. budget deficit might surpass current estimates, potentially leading to an increase in yields for longer-term Treasury bonds due to the possibility of the U.S. attempting to manage its debt through inflation. This forecast doesn’t indicate an immediate stock market crash, but it could result in a notable devaluation of the U.S. dollar.
While it’s not a new occurrence that the founder of Tudor Investment commends Bitcoin’s worth, doing so again as Bitcoin hovers around $69,000 is quite significant. On the other hand, the surge in the US 10-year Treasury yield suggests uncertainty about the Federal Reserve successfully managing an economic “soft landing.
Despite rising economic uncertainties, the foundations for a long-term Bitcoin surge appear robust. For instance, the continued interest in gold, even amid tech firms reporting exceptional profits, suggests dwindling faith in the stock market. Like gold, Bitcoin offers a similar protective quality.
Although it’s uncertain who will win the U.S. presidential elections, Kristin Smith, head of the Blockchain Association, suggests that the upcoming U.S. Congress could be more favorable towards cryptocurrency than ever before. This prediction is based on a large number of new candidates with pro-crypto views entering the political arena. Furthermore, it seems that the number of legislators and policymakers interested in digital assets is increasing.
Bitcoin to benefit from hashrate growth and investors’ interest in alternative assets
The growing interest in Bitcoin ETFs indicates a higher possibility of Bitcoin reaching its previous high of around $67,000. In just over a week (since October 11), these financial products have attracted approximately $2.68 billion, raising the total assets managed by them to an impressive $51.7 billion, as per data from Farside Investors and Coinglass.
The continually increasing projected Bitcoin hashrate, representing the collective computational power used by the network’s verifiers, indicates that miners maintain a positive outlook for the medium to long-term future.
Investing heavily in Advanced Scalable Integrated Circuit (ASIC) mining equipment, which often takes 18 months or more to become profitable, is suggested by a higher hashrate. Since miners are less likely to sell quickly due to this investment, Bitcoin may find it easier to regain its bullish trend and establish $67,000 as a supportive price level.
This piece is meant to provide a broad understanding and shouldn’t be construed as legal or financial guidance. The perspectives shared are those of the author and may not align with the views of CryptoMoon.
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2024-10-22 22:45