Bitcoin has just spent nine weeks in the red and is now technically oversold at the bottom of a bear market. The fundamental concern here is whether the industry’s most valuable asset will retain its momentum following the recent price action.
After surging over $1.31 trillion on Tuesday, the global crypto market cap once again dropped to $1.23 trillion over the last day. Bitcoin (BTC) price is currently holding at the $31,000 level. Several top crypto prices have increased marginally in the last 24 hours while Cardano’s price, which witnessed a big jump on Tuesday, has dropped.
Let’s zoom in after nine straight weeks to the downside
The billionaire investor Chamath Palihapitiya spoke about a few significant concerns in the most recent video of the “Altcoin Daily,” including what triggered the recent surge and whether it is sustainable. Are bears still in control?
The LFG, as we all know, possessed a large amount of bitcoin in its reserves, and when the luna sparked a sell-off in early May, the luna foundation guard liquidated a total of 81 thousand BTC.
Surprisingly, the quantity held by entities with less than one bitcoin has climbed by 8724 BTC since then. There were a lot of people who bought while there was blood in the streets, as this illustrates a transfer from the LFG to less than a hundred BTC.
The Biggest Reason for the Suppression of Bitcoin
When discussing this topic, Chamath stated that the primary reason for bitcoin’s and all markets’ suppression is the Federal Reserve’s actions, such as rising interest rates, because interest rates bring gravity to markets.
To be more specific, there will be a few distinct rate hikes this year, with the present fed funds rate between 0.75% and 1%, and according to other news sources, two more in June and July, bringing us up to roughly 2%. What the Fed is doing is working. i.e., tapering the inflation rate, as seen by what was previously higher in March and April of this year.
Despite the fact that the Fed continues to be unclear about interest rates.
Chamath continued, “People weren’t sure how aggressively they were going to hike, but by early this week it was pretty clear there will be two 50-point hikes, one in June and one in July, and then effectively a pause because the fed funds rate will be around 2%, and everything from there will probably be path and data-dependent.”
It’s all about hiking the inflation data!
That’s how it appears. Here’s hoping for a nice little rally. The issue is whether this is a long-term rally or just a fad. That’s what you call a dead cat bounce or a bear market rally when you get some water and two weeks of reprieve before the thing spears down again, and there is absolutely no surety when it will happen, but it may happen tomorrow on Friday.
Chamath stated that there will be a significant set of inflation figures disclosed and that everyone will be sweating the specifics.
As a result, there is now a pause. There is also the possibility that if this data is relatively solid, prices will not rise as much as projected. Inflation will be less severe than growth, which will be moderate. That leaves a lot of room for the fact to take their foot off the throttle here, and archives will go bomb in that scenario.