Bitcoin trades around the $41,000 markwritten by Bella Palmer
The imminent start of central bank tightening is putting pressure on the crypto market, Morgan Stanley stated on Tuesday
Bitcoin traded around the $41,000 mark on Wednesday as some traders appeared to be in no rush to pick a price bottom. Analysts see the potential for a short-term price bounce, especially as technical indicators have remained in oversold territory for about a month.
Investors and traders appear to be digesting the macro possibilities within this new inflationary regime markets have entered, alongside an increasingly hawkish Federal Reserve, Will Hamilton, head of trading and research at Trovio Capital Management, wrote in an email to CoinDesk.
On Tuesday, Morgan Stanley stated that the imminent start of central bank tightening is putting pressure on the crypto market.
Bitcoin’s market capitalization has tracked the growth of global money supply, which peaked in February 2021 (two months before a 50% drop in BTC's price), according to Morgan Stanley.
For now, some traders are still finding relative value in some alternative cryptocurrencies. Relative value is a method of determining an asset's worth that takes into account the value of similar assets.
Lower demand for bitcoin has been driven by market participants shifting focus towards outperforming mid-cap assets, including Fantom and FTT, which have returned 31% and 15% respectively during the past week, Hamilton stated, referring to the Fantom smart contract platform and the FTT token associated with crypto exchange FTX.
Grayscale Bitcoin Trust (GBTC) shares have widened their discount relative to the underlying cryptocurrency held in the fund, reaching a record of 26.5% on Wednesday.
GBTC has been the preferred venue for institutional investors to gain exposure to crypto without having to purchase bitcoin directly, but the shares have traded at a steep discount over the past year as demand for the product shrank.
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