Good News as Bitcoin and Its Equities May Stabilize
Bitcoin has been around for quite a while but it exploded in value over two to three years ago carrying other cryptocurrencies with the hype. The Bitcoin market has been in a bullish state for quite a while.
However, the cryptocurrency and its equities weren’t in a good place the past couple of weeks as it hits as low as $41,500 causing a lot of its investors and owners to panic. The steady drop in value is quite concerning as the cryptocurrency market for Bitcoin is adopting a more bearish nature.
Is Bitcoin Stabilizing?
If we take a look at Bitcoin’s past performance over the last decade we can see that its value has steadily been growing over the past decade with some dips in between. However, its value suddenly spiked during the late 2020s and has been taking a bullish stance ever since.
It wasn’t until lat 2021 that Bitcoin’s value started dropping steadily due to multiple factors but it’s already stabilizing leaving the $41.5K mark and reaching around $43,000 on Tuesday and dipping to around $42,645.30 today.
Asides from this other altcoins have been following suit such as FTM and MATC showing an increase of value up to 14% showing that investors are still putting money in. Despite the dip, we can clearly see that Bitcoin is returning to a more bullish stance stabilizing both the crypto markets and its equities.
Data and technical indicators show that some traders might be willing to buy during the dip. And although this might be good the huge sell-off is negatively affecting cryptocurrency as a whole for the past couple of months. Some notable victims of the sell-off would be Riot Blockchain (RIOT), Marathon Digital Holdings (MARA), and Bit Digital (BTBT) which revealed massive declines in their stocks since November.
The news can be devastating to a lot of crypto-miner but some aren’t bothered by the dip or choose to hold hoping for eventual stability. Some companies like Bitfarms have even bought a huge amount of Bitcoins totaling almost $43 million at the start of January. News of the bearish stance may scare a lot but for others, this is an opportunity to buy more Bitcoin and take advantage of the situation.
With opportunities also come losses which go to show that not everyone is benefitting from what happened to Bitcoin. Some may have taken the opportunity but a lot of traders who were holding onto Bitcoin have received a massive loss especially during the massive sell-off that happened during 2021.
Bitcoin may be showing signs of stabilizing but it isn’t 100% certain. Right now, a lot of traders and investors are still waiting on the sidelines for the right opportunity to make their move depending on how the U.S. consumer price index (CPI) report will turn out.
A lot of experts have predicted that the CPI will rise to almost 7.1% signaling that there will be inflation. What’s worse is that the rise in CPU is expected to rise all throughout the year. The rise of prices may affect Bitcoin’s value in 2022 as well but this is only if the CPI value rises this year.
Bitcoin’s And Stocks
When it comes to economics a lot of irrelevant things can actually be connected. The same goes for Bitcoins and stocks since there is an underlying correlation between the two. Experts and economic analysts are concerned about the effect of Bitcoin on other equities due to its potential decline.
The graph below shows a side-by-side comparison of the value of Bitcoin and the S&P 500. For those of you who don’t know the S&P 500 is short for “The Standard and Poor’s 500” is simply a stock market index tracking for tracking the top 500 stock companies listed on stock exchanges.
And although the S&P 500 values have been stable all throughout 2021 you can see some slight fluctuations whenever Bitcoin experiences a major rise or dip in value. To paraphrase an expert analyst at FxPro, “Growth stocks and cryptocurrencies are on par with one another. They are both sensitive to the changes and dynamics of interest rates”.
Another analyst by the name of Edward Moya states that the correlation between Bitcoin and equities won’t hold up in 2022 since stocks are only a few percentages off while Bitcoin has been experiencing massive losses down to 40%.
A lot of people both traders, investors, and stock owners are anticipating the latest report about the CPI this year. Bitcoin isn’t just the biggest cryptocurrency but it also has a correlation with stocks and other equities.
And although Bitcoin is showing signs of stabilizing, the future of the crypto market is very volatile so even experts aren’t 100% sure of their predictions. Whether you hold, buy Bitcoin right now, or simply wait on the sidelines is up to you. Bitcoin is in an interesting position and the simple CPI report can determine whether people will be buying or selling this cryptocurrency.
* We hope this information will help you in your investment process, but this is not investment advice. Every investment carries risk, especially in this industry, so DYOR before making a decision.