Pre-Market Stocks: Is the Bitcoin Winter Starting to Melt?

Pre-Market Stocks: Is the Bitcoin Winter Starting to Melt?

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It was cold and hard encryption winter. But signs of a thaw are beginning to appear, prompted by the global currency chaos.

What’s going on: Bitcoin soared to its highest level in more than a week on Tuesday, rising more than 5% as the British pound and other currencies suffered a heavy defeat against the very strong dollar. Gains give crypto bulls hope that so will Bitcoin To become a safe haven assetor which acts as a hedge when stocks go down.

Then, around midday, the dollar grew stronger and bitcoin collapsed again, erasing all of its recent gains. Bitcoin fell about another 1% on Wednesday after the Bank of England tried to do so UK debt support.

When the dollar is strong, “there are no safe havens,” Glenn Goodman, eToro crypto advisor, warned, on CoinDesk TV Tuesday.

Some basic information: Bitcoin struggles for direction: The digital currency has been swinging between $18,000 and $25,000 since mid-June after a massive crash that wiped out nearly $2 trillion from the crypto market. He. She It is currently down 60% year-to-date.

The currency soared during the Covid era on the flanks of near-zero interest rates, monetary stimulus and a massive influx of large institutional investors, reaching a record high of about $70,000 in November.

After that, central banks started raising interest rates to fight inflation, and the dollar strengthened dramatically, seducing investors as the ultimate safe haven. At the same time, the economy is starting to deteriorate and these new investors who still view Bitcoin as a risky asset I came out in droves. The crash triggered a wave of bankruptcies among young companies such as crypto exchanges, Voyager, and Celsius.

Tyler Winklevoss, co-founder of crypto exchange Gemini, told me in an interview: “In the current macro climate, when you have inflation, huge sell-offs and major crypto projects that fail, people are going to hold back.” advance this month. “Bitcoin is still new, so it is still seen by many as a risky asset. As people take risk off the table, bitcoin will suffer. But all assets suffer, and bitcoin is not in this alone.”

The bright side: But even as the price of Bitcoin drops, investors are seeing signs of a downturn.

Ben Gagnon, chief mining officer at Bitfarms, sees anything below $20,000 as the price at which fair-weather institutional investors retreat from the coin for good, which will help stabilize Bitcoin’s current volatility and send it onto an upward trajectory.

As of Wednesday morning, bitcoin was below $19,000.

“I would be very surprised if we finished the year so low,” Gagnon said. “I think Bitcoin will start to recover now that it has been shaken by a lot of excess.”

“This is an exciting time,” said Chris Klein, COO and co-founder of Bitcoin IRA, a digital asset technology platform. “Over the past eight months, bitcoin has been behaving like tech stocks because there are so many institutional investors in it.” With that money flowing in, he said, things could change.

It’s a big TBD, but bitcoin advocates remain cautiously optimistic.

Cryptocurrency advocates aren’t too happy about the Federal Reserve, and that sentiment seems to go both ways.

Federal Reserve Chairman Jerome Powell urged more regulation of digital assets on Tuesday morning at the Bank of France conference on the digitization of finance.

While crypto bulls are likely to claim that declines in markets and other assets have caused the value of cryptocurrencies to plummet, Powell said he is concerned about the opposite. last landing In bitcoin prices, he said, it could spread and cause broader financial turmoil. He said digital currencies need to be regulated and have checks in place just like other market assets.

“There is a real need for more appropriate regulation,” he said, especially as digital currencies “expand and begin to reach more retail customers.”

Other central bankers were not as accurate as Powell. “I don’t see any redemption value” in cryptocurrencies, said Ravi Menon of the Monetary Authority of Singapore. “It’s time for reckoning.”

The Federal Reserve does not regulate cryptocurrencies in the United States, but it does monitor cryptocurrencies held by banks. The central bank is also considering launching a file Central bank digital currencywhich is essentially a digital version of the dollar.

Powell said this coin is not coming any time soon. “We see this as a process that takes at least two years, as we do the work and build public confidence in our analysis and in our final conclusions, which, as I say, we’re certainly not there yet.”

Representatives Maxine Waters and Patrick McHenry were trying to negotiate a… law Project It would regulate the companies behind stablecoins – digital assets pegged to the dollar and used as an alternative to the high volatility of cryptocurrencies such as bitcoin.

The bill would subject them to federal oversight and reserve requirements to protect clients in the event of bankruptcy — exactly the kind of regulation Fed Chairman Powell called for on Tuesday.

But the canister keeps kicking on the road. That’s because Congress was “hesitant about how to craft the text of the bill,” Politico reports. They are having trouble wrapping their heads around how cryptocurrencies are regulated.

“I don’t think anyone would advise that someone not familiar with the industry or not familiar with it is in a position to legislate and regulate,” Ben Gagnon, who works with politicians to defend his crypto-mining company, Bitfarms, told me.

“There have been some federal government initiatives by agencies to study bitcoin, but that process is largely nonexistent,” he said.

The White House recently released a file Special plans for the regulation of encryption, but critics have argued that they lack real teeth. The Blockchain Association, one of the largest groups in the digital asset industry, said the Biden administrations report lacked “objective recommendations.”

CEO Kristen Smith said in a statement that the report focused too much on criticism of the industry and was light on policy. She described the reports as a “missed opportunity to advance the leadership of cryptocurrencies in the United States.”

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