Bitcoin‘s price dropped by over 13% within the last week, causing it to hover around $62,000 currently. Some investors remain optimistic, predicting that this decline might trigger a “doomsday rally,” potentially fueled by escalating conflicts in the Middle East.
After the 2008 financial crisis, Bitcoin emerged as a possible safeguard against geopolitical upheavals. However, it has been categorized as a risk asset by investors recently, with its connection to the Nasdaq intensifying at certain moments, and weakening during the latest bull market.
The connection between Bitcoin and Nasdaq returns over the past 60 days has reached a record low for 2021, and it’s continuing to decrease. This trend can be attributed in part to market makers reducing their crypto trading activities in the US due to the increased regulatory scrutiny following the FTX incident.
— Alex Krüger (@krugermacro) May 23, 2023
Edouard Hindi, Tyr Capital’s Chief Investment Officer, believes Bitcoin remains a suitable “safe-haven asset” due to its growing correlation with gold, as reported by CoinDesk. He also mentioned that Spot Bitcoin ETFs are fueling this trend and predicted Bitcoin’s price could reach $120,000 in the near future.
The forecast is influenced by escalating geopolitical conflicts following Iran’s weekend assault on Israel with drones and missiles, marking a historical first for the country directly targeting Israel. This retaliation came in response to an attack on one of its embassies.
Some price forecasts have been more positive, including Robert Kiyosaki’s prediction that the price of Bitcoin could reach as high as $2.3 million per coin. The author of the best-selling personal finance book “Rich Dad Poor Dad” has expressed optimism about Bitcoin once again.
At present, the desire for Bitcoin, the leading cryptocurrency, is increasing significantly faster than ever before. Simultaneously, the amount of Bitcoin kept in exchanges has reached a historic minimum. This situation might lead to a supply shortage and potentially cause prices to rise sharply.
Based on information from CryptoQuant, led by its Head of Research Julio Moreno, the need for Bitcoin is now surpassing its availability. For the first time, according to the firm’s data, the desire for Bitcoin among long-term holders exceeds the amount being issued.
According to CryptoQuant’s data, approximately 9.8% (or around 1.94 million) of the total 19.67 million Bitcoins in circulation is currently held by known exchange wallets.
The amount of Bitcoin held in exchange reserves has been gradually decreasing since reaching a high of 2.85 million BTC in July 2021. This reduction in exchange supply implies that investors are adopting a buy-and-hold approach, preferring to keep their Bitcoin for the long term instead of frequently trading it.
Remarkably, if the quantity of an asset on exchanges decreases significantly, there’s a risk of a supply shortage should demand unexpectedly spike. A supply shortage materializes when the accessible amount of an asset on exchanges suddenly drops while demand rises.
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2024-04-17 04:52