Bitcoin in demand among large investors again
2023.01.31 03:47
Bitcoin in demand among large investors again
By Kristina Sobol
Budrigannews.com – After a record-breaking month for bitcoin, major investors are re-dipping their toes into the cryptocurrency market.
According to data from asset manager CoinShares, digital asset investment products, which are frequently favored by institutional investors, saw inflows of over $117 million last week, the largest weekly increase since July.
was unquestionably the most significant draw, accounting for $116 million of that for funds tracking it. The total assets managed by crypto funds now total $28 billion, a 43% increase from the November lows caused by the FTX exchange’s collapse, which shocked the industry.
Joseph Edwards, an investment adviser at Enigma Securities, stated, “For the most part, people are more confident than they were a month ago.”
The original cryptocurrency, Bitcoin, has surged nearly 40% in January, close to its best month since October 2021 and its second-best January in the past ten years.
Some investors are hopeful that the long crypto winter may finally be coming to an end thanks to the rally and a macro picture that may be getting better. The Federal Reserve of the United States is expected to raise benchmark rates by 0.25 percent this week, which would be the smallest increase since the beginning of their tightening cycle last year.
Analysts at Fidelity Digital Assets wrote, “If peak inflation is indeed behind us for now, then long-term interest rates may move lower as we approach the end of the inflation-focused rate-hiking cycle.”
“This could indicate positive macro momentum for bitcoin and other assets.”
According to crypto liquidity provider B2C2, activity in the options market indicated that traders were rushing to place bets shortly after the Fed meeting, indicating the market’s importance.
CoinShares reports that the average weekly volume of crypto trading is up 11%, indicating that traders are returning after months of reduced activity.
However, crypto is far from safe, and the Fed could still ruin the party if they adopt a more hawkish stance this week.
The cryptocurrency data platform Coinglass’s bitcoin Fear & Greed index is currently at 61, the highest level since mid-November 2021, when bitcoin began to fall from its peak. 0 indicates extreme fear, and 100 indicates extreme greed.
Edwards stated:
“We might see a drop off in the next week or two, but how deep that drop goes is questionable.”
Analysts at the exchange Bitfinex, on the other hand, believe that there are additional indications that the bear market may soon be over. They claimed that longer-term “HODlers” were still holding onto their cryptocurrency and were not contributing to selling pressure while shorter-term investors were profiting from their bitcoin sales.
They stated:
“For the first time since April 2022, the realised profit and loss for the entire market has been recorded as positive in January 2023; a continuation of this trend would signal the final stages of a bear market.”
In addition, bitcoin’s “dominance,” or share of the total crypto market, has been around 41% this month, which is the highest level since July. Citi analysts said this was similar to the rise in bitcoin dominance in April 2019, when a bitcoin rally marked a crypto market bottom.
According to other market observers, the performance of interest rate-sensitive tech stocks, another relatively risky asset class, would likely drive bitcoin prices in the following week.
The highest level of correlation between Bitcoin and the Nasdaq since May 2022 is 0.94; a correlation value of 1 indicates that the two are moving in the same direction.
A negative correlation of 0.7 existed between bitcoin and stocks at the end of November.
According to exchange CEO Rachel Lin, “it’s possible that bitcoin could reach the next resistance level of $25,200 in the coming weeks.” Even if bitcoin crashes once more, there is a good chance that it will make a higher low over a longer period of time.”
