Will bitcoin recover?

It's hard to say if the cryptocurrency market is in full recovery mode. After all, bear market rebounds are common and no one really knows where the bottom is.

Will bitcoin recover?

It's hard to say if the cryptocurrency market is in full recovery mode. After all, bear market rebounds are common and no one really knows where the bottom is. If investors continue to reduce the risk of their portfolios, cryptocurrency holdings may be the first to be eliminated by retail and institutional investors alike. Around the same time, Elon Musk announced that Tesla would no longer accept bitcoins due to weather concerns.

Musk intends to resume using Bitcoin for transactions once Bitcoin mining moves to more sustainable energy, the price of bitcoin and other notable digital assets fell sharply in early December. Cryptocurrency is volatile, with a history of “boom and fall” cycles that make many wonder if a bitcoin crash is inevitable. Bitcoin has been volatile lately, rising and falling sharply in the wake of a series of news. Many investors see Bitcoin's price swings as part of the game, but “volatility is difficult for individual investors to handle, Noble says.

Unlike traditional investments, such as company stocks, in which price movements can be influenced by the performance of the business or sector in which it operates, bitcoin does not have any underlying assets. We believe that the increased participation of institutions, which are sensitive to the availability of capital and, therefore, to interest rates, has partly contributed to the high correlation between Bitcoin and stocks. Some experts also believe that TerraUSD (UST), one of the largest stablecoins, played a role in Bitcoin's crash last week. Bitcoin's volatility is causing uncertainty in the cryptocurrency market that has forced investors to make difficult decisions with their portfolios.

If it were all about an inflationary shock, as happened in 1974, most bitcoin investors believe it would provide protection. There is still real investment potential in Bitcoin and many of the best altcoins, such as Ethereum, Tether and Litecoin. More generally, new short-term investors who are selling their stakes in reaction to the latest drop may be contributing to the fall in Bitcoin's value, according to a report by Glassnode Insights, a blockchain analytics firm. Unlike perpetual contracts that are present in most financial markets, among cryptocurrency traders the premium of Bitcoin futures contracts is analyzed, which is also known as the base.

This move has been driven by significant outperformance of large-cap cryptocurrencies Bitcoin (BTC 2.56%), Solana (SOL 3.03%) and Avalanche (AVAX 4.88%) today. Given its volatile nature, bitcoin may regain momentum at some point in the future (perhaps weeks, months, or even years later).

Edmund Elsensohn
Edmund Elsensohn

Hardcore tea nerd. Evil zombie buff. Avid social media lover. Unapologetic twitter enthusiast. Total tv advocate.

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