Major Factors for Bitcoin Recovery

ByteTree founder Charlie Morris analyzed four factors that can help understand how the prices of Bitcoin and other cryptocurrencies have reacted to recent declines, and what could be yet to come.

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Technical and Fundamental Analysis of Bitcoin Price 

This analysis shows that it is too late to be cautious, but it is better to be patient. In fact, the network seems absolutely stable, institutional investors have not left the crypto markets, and macro conditions will improve at some point.

Prices have stabilized over the past week and there has been a slight increase in confidence in the markets after a period of hard selling.

On-chain data analysis

In terms of on-chain data, the network has only seen a slight decline compared to past cycles despite the price collapse, which should be seen as a positive given that part of BTC's value comes from network activity. There is also no significant decline in large value transactions, which would indicate that institutional activity has remained high.

Miners are likely to curtail their activity and transaction fees continue to rise, despite lower average transaction volumes.

Morris notes that during the current cycle BTC price it is correlated with mining company stocks, just as it is in the normal commodity market. This infers that stocks will struggle a lot on the downside unless BTC is released into the market (which is quite unlikely).

Technical price analysis

From a technical analysis perspective, negative trends are disappearing while stronger trends are starting to emerge and become reality. Two of these positive trends are the strength of Ethereum and the strength of Bitcoin against the Nasdaq.

The presence of institutional investors and the macroeconomic environment

In terms of investment flows, capital flows to and from the market stabilized. However, the discount on shares of GBTC, the Grayscale fund dedicated to Bitcoin, is quite steep.

In contrast, macro conditions suggest positive developments for alternative assets such as cryptocurrencies and commodities, with the US dollar still strong.

Bitcoin and traditional stocks were on the rise immediately following the FOMC's announcement yesterday of its decision not to raise interest rates by 100 basis points, but only by 75 basis points. The decision and the way it was communicated seems to have dampened some bearish sentiment.

Regardless of how well the Fed can manage expectations, a surge in economic growth will require a focus on investing resources in high-growth sectors. There is a good chance that economic growth will be driven by blockchain technologies, some of which will be driven by a secondary economy that is supported by digital assets.

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All content in this article is for informational purposes only and does not in any way serve as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.