Značka: Inflation

Polygon (MATIC) sees a strong oversold bounce after $250B crypto market rebound

Polygon (MATIC) emerged as one of the best performers among high-ranking cryptocurrencies on Jan. 26 as the price rose nearly 17% to reach an intraday high at $1.825.The gains surfaced amid a synchronous rebound across the crypto market that started on Jan. 24. In detail, investors and traders poured in over $250 billion across digital assets, benefiting Bitcoin (BTC), Ether (ETH) and many others in the process.Performance of the top-fifteen cryptocurrencies in the last 15 days. Source: TradingViewPolygon, a secondary scaling solution for the Ethereum blockchain, also cashed in on the crypto market rebound. The valuation of its native token, MATIC, rose from as low as $9.77 billion on Jan.24 to as high as $13.58 billion two days later.Meanwhile, its price jumped from $1.312 to $1.825 in the same period — that’s nearly a 40% gain in just three days.Fed meeting and high-profile hiringThe latest bout of buying in the Polygon market appeared ahead of a Federal Reserve announcement about its interest rate increase scheduled to come on the afternoon of Jan. 26. In detail, cryptocurrencies have also been through several whipsaws in recent months over expectations that the U.S. central bank would embark on a series of interest rate hikes to fight inflation. Similarly, stock markets have suffered because of the prospect of the Fed’s shrinking balance sheet and higher rates.According to Luca Paolini, the chief strategist at Pictet Asset Management, people may have expectations that the recent turmoil in the stock market and a rising rift between Ukraine and Russia that has drawn in NATO allies’ focus may have the Fed tone down its rate hike rhetorics.Waiting for the FED to speak today.— David Gokhshtein (@davidgokhshtein) January 26, 2022Nonetheless, Polygon managed to outperform top rivals like Bitcoin and Ethereum in terms of intraday gains, and it appears a high-profile hiring was the core reason behind it.As Cointelegraph reported on Jan. 25, YouTube’s head of gaming, Ryan Watts, left the streaming giant to join Polygon Studios, a gaming and nonfungible token (NFT), backed by the namesake layer-2 protocol’s $100 million fund. Related: Altcoins book 40% gain after Bitcoin and the crypto market enter a relief rallyThe news seemingly boosted investors’ appetite for MATIC, prompting it to do better than other large-cap cryptocurrencies.Huge news for $matic https://t.co/uNFO6MtddN— Lark Davis (@TheCryptoLark) January 25, 2022

Key support levels heldMATIC’s sharp rebound placed the price back above its 200-day exponential moving average (200-day EMA; the blue wave in the chart below), a level significant for its role in limiting the market’s downside bias.MATIC/USD daily price chart. Source: TradingViewOn Jan. 25, MATIC bulls attempted to reclaim the 200-day EMA as support almost a week after losing it. The drop-and-bounce around the blue wave looked very similar to the price action in the July–August period last year, wherein closing above it had led to a 200%-plus price rally.The fractal shows strong buying sentiment among MATIC traders near the 200-day EMA. Therefore, should the price stay above the support, its likelihood of continuing its uptrend appears higher. Nonetheless, the bullish momentum risks exhaustion near MATIC’s descending trendline resistance, as shown in the chart above.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Boom or bust? Is there a way for Bitcoin price to hit $100K in 2022?

The internet is filled with Bitcoin (BTC) price forecasts. For example, some analysts believe that the flagship crypto will hit $1 million per coin in the next 10 years, while others think BTC price will eventually drop to zero.Without dwelling on predictions that are five or more years ahead of us, let us focus on what Bitcoin could do, say, in the next six months? Again, the forecasts vary drastically. For instance, Antoni Trenchev, the founder of Nexo Finance, sees Bitcoin price hitting $100,000 by mid-2022.On the other end of the spectrum is Sussex University professor Carol Alexander, who thinks Bitcoin price could drop to as low as $10,000, thereby wiping out all the gains it had made in 2021.Bitcoin has been trending almost in the middle of these two extremely far predictions and at press time the cost to purchase one BTC is close to $36,500 at Coinbase.BTC/USD weekly price chart. Source: TradingViewBitcoin’s circulation will increase on an average of 6.25 BTC per 10 minutes until the next halving in early 2024. This means miners will produce about 900 BTC every day. As a result, by the end of June 2022, there will be a total of 162,900 BTC created into the year.This would push the total Bitcoin supply in circulation to about 19.078 million BTC. If BTC price is $100,000 by then, its total market capitalization would be nearly $2 trillion, up 128.50% from the year’s opening valuation near $875 billion.Conversely, a drop to $10,000 would push the Bitcoin market capitalization of the total circulated tokens down to over $190 billion, down $685 billion, or about 78%, from this year’s open.So the biggest question that comes to mind after looking at these mind-boggling predictions is whether it is even possible for Bitcoin to move violently towards either of the targets mentioned above. In my opinion, the answer is a BIG YES, mainly because BTC price has been notoriously volatile in the past.Bitcoin quarterly returns. Source: CoinglassOne question to consider is whether or not investors are ready to inject almost a trillion dollars into the Bitcoin market across the next six months? Trenchev believes they may because of the “cheap money” factor.Sovereign currency devaluation remains a catalystInvestors will have noticed that the U.S. dollar’s valuation has been recovering lately. A popular economic indicator, dubbed as the “U.S. dollar index,” measures the greenback’s strength against a weighted basket of six foreign currencies — the Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP), Canadian Dollar (CAD), Swedish Krona (SEK), and Swiss Franc (CHF) — surged over 7% to 96.22 last year.U.S. dollar index weekly price chart. Source: TradingViewIt’s also worth noticing that the dollar’s valuation has surged only against fiat currencies, but against commodities, the greenback has been losing battle after battle. For instance, a recent U.S. Bureau of Labor Statistics report indicates that consumers paid 7% higher for everyday items in December 2021 than they did 12 months ago. In other words, the inflation in the world’s largest economy has risen to the levels never seen before 1982.This shows the dollar is nothing but the best weak boxer in a ring competing with the six weakest boxers. Sure, the greenback has been winning rounds against them all, but it has also been running away from the real competition. Speaking of competition, let’s compare its value against a scarcer asset, gold.Fiat currencies versus Gold since 1900. Source: VOIMAThe image above also shows that almost all the fiat currencies have lost their sheen against gold. The big elephant in the room is inflation, which benefiting investors that have been hoarding the precious metal — or any hard money equivalent — against the current bearish trend in currencies like the dollar.Currently, there is about $40 trillion circulating across markets, which includes all the physical money and the money deposited in savings and checking accounts. Meanwhile, investments, derivatives and cryptocurrencies are above $1.3 quadrillion.So yes, there are enough greenbacks available in the market to pump the Bitcoin market by another trillion dollars, such that its cost per unit rises to $100,000 in the next six months.Why hasn’t BTC hit $100,000 already?Before even entertaining that argument, it is wiser to look at Bitcoin’s market cap performance over the years.BTC/USD six-month market cap chart featuring $100B+ in rallies. Source: TradingViewIn the six-month timeframe chart above, one can see that there has not been a single instance wherein the Bitcoin market capitalization had risen by over $1 trillion. Similarly, there also has not been a single case where Bitcoin’s market valuation dropped by more than $190 billion in six months, as required in the event of a BTC price drop to $10,000.Despite not rising or falling drastically, the Bitcoin market — as per historical data — attracts more capital in that it spits out, indicating why its price per unit has rallied by more than 14,250% to date since January 2014.Now, returning to the “why-it-has-not-happened” argument, there seems to be only one answer: uncertainty. And uncertainty has many branches, ranging from regulatory troubles to fears that the Bitcoin market may need a correction after rallying for almost two years in a row.The Fed’s “taper tantrum” is impacting investor confidenceThe most commonly discussed reason for Bitcoin’s recent drop from $69,000 to $34,000 is the U.S. Federal Reserve’s decision to end its $120 billion a month asset purchasing program sooner than anticipated. This is expected to be followed by at least three interest rates hikes from their current near-zero levels.These loose monetary policies ended up injecting about $6.5 trillion since the coronavirus-induced global market crash in March 2020. As a result of the excess liquidity, the dollar’s value dropped while riskier assets, including Bitcoin, became ballistically bullish. According to Crossborder Captial founder Micheal Howell, the excess funds in the market ‘had to go somewhere.’M2 money supply weekly chart. Source: TradingViewAs the Fed unwinds its quantitative easing policy to tame inflation, it effectively removes the excess dollars from the market. And as the markets — hypothetically — run out of cash, they raise it by selling their most profitable investments, be it stock, real estate, Rolex watches or crypto.Therefore, the next six months could turn out to be a seesaw between those who need cash and those who don’t. Inflation led by the dollar devaluation could keep many investors from selling their assets, including Bitcoin. But with the Fed switching off its liquidity plug, crypto markets could face difficulties in attracting new money.This leaves Bitcoin with investors and firms that have excess cash in their treasuries and have been looking to deploy them into easily liquefiable assets. So far, Bitcoin has attracted big names like Tesla, Square, MicroStrategy, and others. So naturally, it would take at least a popular Wall Street firm’s willingness to add Bitcoin to its treasury to enable BTC’s push toward $100,000.Waiting on the retail boomMeanwhile, as inflation creeps into people’s everyday lives, their likelihood of adopting hard assets to protect their savings could also mean a boon for the Bitcoin market. For instance, BTC’s climb to $69,000 last year coincided with an unprecedented spike in retail interest, per a Grayscale Investment report.Related: Retail is pushing the Bitcoin price up, says Ledger CEOThe U.S. firm surveyed 1,000 investors and found that 59% were interested in investing in Bitcoin. Meanwhile, 55% said they had purchased the assets between December 2020 and December 2021.Bitcoin addresses with a non-zero BTC balance. Source: GlassnodeWhether boom or bust, here’s what needs to happenIf, Bitcoin were to reach $100,000 by the end of June 2022, here’s what would need to happen. The M2 money supply remains at an all-time high.The planned interest rate hikes fail to keep inflation below the Fed’s 2% target.The number of non-zero Bitcoin wallets continues to rise to new record highs.More companies add BTC to their treasuries.Meanwhile, Bitcoin could crash to $10,000 if:Long-term investors decide to dump Bitcoin to raise cash.Regulatory issues and a sharp correction in equities prices weighs on crypto pricing.Some unforeseen market manipulation or black swan event tanks BTC price like the March 2020 flash crash.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Crypto heavyweights back inflation-resistant savings protocol

Fintech startup Seashell has raised $6 million in seed investments from some of crypto’s biggest venture funds and project founders as it seeks to build out an inflation-resistant finance app — a timely initiative as consumers struggle with the pressures of rising costs.  The investment round was co-led by Khosla Ventures and Kindred Ventures, with additional participation from Robinhood co-founder Vlad Tenev, billionaire investor Mark Cuban, former U.S. Commodity Futures Trading Commission Chair J. Christopher Giancarlo and Coinbase Ventures. The founders of crypto-focused projects Terra, Polygon, Avalanche and Solana were also among the investors. Seashell is launching a consumer app that gives users a simple way to earn higher yields on their money. The company claims that its Seashell Save product gives users up to 10% interest on their funds, with flexible redemption options. The app is available on both Android and iOS devices. Company founder and CEO Daryl Hok, who also served as executive vice president and chief operating officer at blockchain security firm CertiK, told Cointelegraph that the app generates yield from both “on-chain and off-chain sources” despite not being an actual DeFi product. He further explained:“Similar to how traditional banks put customer money to work by loaning out the funds, Seashell invests customer money across DeFi protocols and off-chain lending to generate higher yields for its users.”Although Seashell isn’t built on the blockchain, the app could still appeal to savers who are worried about inflation and the erosion of their purchasing power.Fed gone wild. M1 money supply edition.Operative word: Wow.$SPX #M1 pic.twitter.com/DQlxOqznZZ— Sven Henrich (@NorthmanTrader) April 6, 2020Inflation has made front-page news over the past six months as governments struggle to contain surging prices. Although politicians have blamed supply shortages for the rise in prices, the more plausible explanation is the ballooning money supply. The United States Federal Reserve, for example, has printed more money in the last two years than in all of the country’s previous history combined. Related: ‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this weekThe United States’ M1 money supply rose from over $4 trillion in January 2020 to over $20.3 trillion in November 2021. Source: Federal Reserve Bank of St. LouisCost pressures increased again in December, with the U.S. consumer price index, better known as the CPI, rising 0.5% during the month to a total of 7% annually. That was the highest year-over-year gain since 1982. Sarah House, a senior economist at Wells Fargo, told the Wall Street Journal that “There is still tremendous momentum when it comes to inflation right now,” adding that price increases are likely to peak in the coming months.

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Bitcoin shoots to $44,000 as US inflation hits 7.8% in December

The latest figures from the United States Bureau of labor statistics show that the (Consumer Price Index) CPI hit 7% in December. Bitcoin (BTC) was volatile prior to the announcement, fluctuating over $2,000 from lows of $41,000 to $43,000 on Wednesday morning. Upon release of the figures, the price continued its upward climb, touching $44,000. Prior to the announcement, Twitter was rife with speculation. According to a poll by @coinbureau, 53% of his 580,000 followers expected CPI to overshoot the consensus estimation of 7% inflation.Macroeconomic specialist and cryptocurrency soothsayer Lyn Alden was on the money.December CPI comes out tomorrow and has a decent shot at reaching 7%+ year-over-year.But then unless monthly inflation accelerates from here, the year-over-year figure will likely peak within Q1 2022. pic.twitter.com/7hjA3ehAXI— Lyn Alden (@LynAldenContact) January 11, 2022The graph for inflation from the FED over the past 10 years is eye-opening. Since the pandemic, marked in grey, the inflation level plummeted before beginning a dizzying climb to 7%.Related: Bitcoin crash ahead? Expert warns higher inflation could whip BTC price to $30KCastle Island Ventures’ Nic Carter was more tongue-in-cheek prior to the data update. In anticipation of more inflation rises, he joked that he was “looking forward to the inflationista cope if CPI prints double digits”. Inflation rates have become of paramount concern to developed countries around the world, but particularly for the United States. 7% is the highest inflation rate since the 1980s. Traditional markets including the S&P kicked off in the green, up 0.36%, while BTC was up 2.8% during the morning’s action.

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'Most bullish macro backdrop in 75 years' — 5 things to watch in Bitcoin this week

Bitcoin (BTC) starts a new week in a strange place — one which is eerily similar to where it was this time last year.After what various sources have described as an entire twelve months of “consolidation,” BTC/USD is around $42,000 — almost exactly where it was in week two of January 2021.The ups and downs in between have been significant, but essentially, Bitcoin remains in the midst of a now familiar range.The outlook varies depending on the perspective — some believe that new all-time highs are more than possible this year, while others are calling for many more consolidatory months.With crypto sentiment at some of its lowest levels in history, Cointelegraph takes a look at what could change the status quo on shorter timeframes in the coming days.Will $40,700 hold?Bitcoin saw a trying weekend as the latest in a series of abrupt downward moves saw $40,000 support inch closer.Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $40,700 on major exchanges before bouncing, a correction which has since held.Ironically, it was that very level which was in focus on the same day in 2021, that nonetheless coming during what turned out to be the more vertical phase of Bitcoin’s recent bull run.Last September also returned the focus to $40,700, which acted as a turning point after several weeks of correction and ultimately saw BTC/USD climb to $69,000 all-time highs.Now, however, the chances of a breakdown to the $30,000 zone are unreservedly higher among analysts.“Weekly Close is just around the corner,” Rekt Capital summarized alongside a chart with target levels. “Theoretically, there is a chance that $BTC could perform a Weekly Close above ~$43200 (black) to enjoy a green week next week. Weekly Close under ~$43200 however & BTC could revisit the red area below.”BTC/USD annotated candle chart. Source: Rekt Capital/ TwitterBitcoin ultimately closed at $42,000, since hovering at around that level in what could turn out to be some temporary relief for bulls.“I think market puts in a lower high,” fellow trader and analyst Pentoshi forecast, adding that he believes $40,700 will ultimately fall.An increasingly alluring target, meanwhile, lies at last summer’s $30,000 floor.Consensus forms over dire outlook for cashThe macro picture this week is particularly complicated for risk asset fans, with Bitcoin and altcoins no exception.What the future holds, however, varies considerably from one pundit to another.The United States Federal Reserve is broadly seen to start raising interest rates in the coming months, this making investors de-risk and causing a headache for crypto bulls. “Easy money,” which began flowing in March 2020, will now be much harder to come by.The bearish viewpoint was summarized neatly by ex-BitMEX CEO, Arthur Hayes, in his latest blog post last week.“Let’s forget what non-crypto investors believe; my read on the sentiment of crypto investors is that they naively believe network and user growth fundamentals of the entire complex will allow crypto assets to continue their upward trajectory unabated,” he wrote. “To me, this presents the setup for a severe washout, as the pernicious effects of rising interest rates on future cash flows will likely prompt speculators and investors at the margin to dump or severely reduce their crypto holdings.”This week sees the U.S. consumer price index (CPI) data for December released, numbers which will likely feed into the story of surprise inflation gains.Hayes is far from alone in worrying over what the Fed may bring to crypto this year, with Pentoshi among others likewise calling a temporary end to the bull run.“And the final question is, can crypto ignore the Fed if it decides to go all out wielding a deflationary machete? I doubt it,” analyst Alex Krueger concluded in a series of tweets on the issue this weekend. “‘Don’t fight the Fed’ applies both ways, up and down. If the Fed is *too hawkish* then Houston, we have a problem.”There were some optimists left in the room. Dan Tapiero, Founder and CEO of 10T Holdings, told followers to “ignore” the recent rout and focus on an unchanged long-term investment opportunity.“Most bullish macro backdrop in 75 years,” he said. “Booming economy supported by massive negative real rates. Fed will never equalize rates with inflation. Stay long stocks and Bitcoin and ETH. Hodl through short term volatility. Real Dollar cash savings will continue to lose value.”Here’s a look at the Effective Fed Funds Rate and Inflation Rates when the Unemployment Rate was at 3.9%, as it is today.Find the outlier… pic.twitter.com/zU1zRj1uXC— Charlie Bilello (@charliebilello) January 7, 2022Tapiero highlighted data compiled by Charlie Bilello, founder and CEO of Compound Capital Advisors.RSI hits two-year lowsAmid the gloom, not everything is pointing to a protracted bearish phase for Bitcoin specifically.As Cointelegraph has been reporting, on-chain indicators are calling for upside in droves — and historical context serves to support those demands.This week, it’s Bitcoin’s relative strength index (RSI) which continues to headline, reaching its lowest levels in two years.#Bitcoin RSI has been this low just 2 other times in the last 2 years. Looks like a bottom is near and bounce due. Let’s see pic.twitter.com/qhQ1pD8yEl— Bitcoin Archive (@BTC_Archive) January 9, 2022

RSI is a key metric used to determine whether an asset is “overbought” or “oversold” at a given price point.Plumbing the depths at $42,000 suggests that such a level really is considered too extreme by the market, and a rebound should occur to balance it. By contrast, last January, RSI was sky high and conversely well within “overbought” territory, while BTC/USD traded at the same price.“The Bitcoin RSI is on the lowest point in 2 years on the daily. March 2020 & May 2021 were the last ones. And people flip bearish here / want to short,” a hopeful Cointelegraph contributor Michaël van de Poppe commented.BTC/USD 1-day candle chart (Bitstamp) with RSI. Source: TradingViewCointelegraph noted similarly bullish hints on the monthly RSI chart last week.Hash rate recoups Kazakhstan lossesAnother blip from last week already “curing itself” comes from the realm of Bitcoin fundamentals. After hitting new all-time highs throughout recent weeks, Bitcoin’s network hash rate took a hit when turbulence in Kazakhstan comprised internet availability.Kazakhstan, home to around 18% of hash rate, has since stabilized, allowing the hash rate to mostly return to prior levels of 192 exahashes per second (EH/s).At one point down to 171 EH/s, responses to what may have reminded some of last May’s China mining ban appear to have lifted hash rate and preserved record-breaking miner participation.Bitcoin’s network difficulty, despite the upheaval, still managed to put in a modest increase this weekend and is currently on track to do so again at its next automated readjustment in just under two weeks.Live Bitcoin hash rate chart screenshot. Source: MiningPoolStats“Going up forever,” on-chain analyst Dylan LeClair commented about the classic mantra, “price follows hash rate.”For context, China’s mining rout caused hash rate to decline by 50%. It took around six months to recoup the losses.“What if…?”Someone who has long been saying that it’s high time for a Bitcoin trend reversal is quant analyst PlanB, creator of the stock-to-flow-based BTC price models.Related: Top 5 cryptocurrencies to watch this week: BTC, LINK, ICP, LEO, ONECurrently weathering a test of his creations — and the accompanying storm of social media criticism — PlanB nonetheless remains more optimistic than most when it comes to mid to long-term price action.“I know some people have lost faith in this bitcoin bull market,” he acknowledged this weekend. “However we are only halfway into the cycle (2020-2024). And although BTC experiences some turbulence at $1T, the yellow gold cluster at S2F60/$10T (small black dots are 2009-2021 gold data) is still the target IMO.”Stock-to-flow cross-asset (S2FX) chart. Source: PlanB/ TwitterHe was referring to the stock-to-flow value for Bitcoin, gold and other assets as part of his stock-to-flow cross-asset (S2FX) model, which calls for an average BTC/USD price of $288,000 during the current halving cycle.Closer to home, however, a more simplified comparison between Bitcoin this cycle and its two previous ones saw a feasible trajectory beginning with a U-turn now. What if … pic.twitter.com/te36HkFAbQ— PlanB (@100trillionUSD) January 9, 2022

A separate model, the floor model, which demanded $135,000 per bitcoin by the end of December, has now been discarded after failing to hit its target for the first time ever in November.

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Bitcoin crash ahead? Expert warns higher inflation could whip BTC price to $30K

Bitcoin (BTC) may end up falling to as low as $30,000 if the U.S. inflation data to be released on Wednesday comes any higher than forecasted, warns Alex Krüger, founder of Aike Capital, a New York-based asset management firm.The market expects the widely-followed consumer price index (CPI) to rise 7.1% for the year through December and 0.4% month-over-month. This surge highlights why the U.S. Federal Reserve officials have been rooting for a faster normalization of their monetary policy than anticipated earlier.U.S. headline inflation. Source: Bureau of Labor Statistics, BloombergFurther supporting their preparation is a normalizing labor market, including a rise in income and falling unemployment claims, according to data released on Jan. 7.”Crypto assets are at the furthest end of the risk curve,” tweeted Krüger on Sunday, adding that since they had benefited from the Fed’s “extraordinarily lax monetary policy,” it should suffice to say that they would suffer as an “unexpectedly tighter” policy shifts money into safer asset classes.Excerpts:”Bitcoin is now a macro asset that trades as a proxy for liquidity conditions. As liquidity diminishes, macro players now in the fray sell bitcoin, and all of the crypto follows.”The first interest rate hike in March 2022?The Fed has been buying $80 billion worth of government bonds and $40 billion worth of mortgage-backed securities every month since March 2020. Meanwhile, the U.S. central bank has kept its benchmark interest rates near zero, thus making lending to individuals and businesses cheaper.BTC/USD vs. Fed balance sheet. Source: TradingViewBut the collateral damage of a loose monetary policy is higher inflation, which reached 6.8% in Nov. 2021, the highest in almost four decades. So now the Fed, which once claimed that rising consumer prices are “transitory,” has switched its stance from expecting no rate hikes in 2022 to discussing three hikes alongside their balance sheet normalization.“It’s more dramatic than what we anticipated and the Fed’s pivot to a more hawkish stance has been the surprise,” Leo Grohowski, the chief investment officer of BNY Mellon Wealth Management, told CNBC, adding:”Most market participants expected higher rates, less accommodative monetary policy, but when you look at the fed funds implying a 90% chance of a hike in March, on New Year’s Eve that was just 63%.”Mini bear market?Mike McGlone, the senior commodity strategist at Bloomberg Intelligence, called $40,000 an important support level in the Bitcoin market. Furthermore, he anticipated that the cryptocurrency would eventually come out of its bearish phase as the world becomes digital and treats BTC as collateral.BTC/USD daily price chart featuring $40K-level’s history as support. Source: TradingViewThe statement arrived as Bitcoin’s drop from its Nov. 8 record high of $69,000 is now over 40%. According to Eric Ervin, chief executive officer at Blockforce Capital, the drop has primarily washed off recent investors, leaving the market with long-term holders.It could be the beginning of a “mini bear market,” the executive told Bloomberg, adding that such corrections are “completely normal” for crypto investors.Related: Bitcoin performs classic bounce at $40.7K as BTC price comes full circle from January 2021Krüger also noted that Bitcoin has already dropped too much from its record highs, insofar that it now stands technically oversold. So, if the CPI reading surprises on the downside, markets could expect the BTC price to pop and trend for a while.”Wednesday will have the US inflation data,” Krüger said, adding:”Think prices should chop around 41k and 44k until then, with an upwards skew given how strong the rejection of the lows has been.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Ethereum plunges 13%, down more than Bitcoin after Fed spooks crypto market

Ethereum’s native token Ether (ETH) plunged sharply hours after the U.S. Federal Reserve released the minutes of their December meeting, showing that they eye a faster timetable for hiking interest rates in 2022.The minutes showed that the Federal Open Market Committee (FOMC) is in favor of raising short-term rates “sooner or at a faster pace than participants had earlier anticipated.” According to the CME Group, trading in the interest-rate futures market showed a two-thirds possibility of the first increase in March.Ether turned lower after the minutes were released, dropping by over 13.50% to as low as $3,300. Its plunge mirrored similar downside moves across the crypto market, with Bitcoin (BTC) shedding a little over 9% to nearly $42,100.ETH/USD four-hour price chart. Source: TradingViewIncontestably, ETH/USD returned more losses to its investors than BTC/USD after the Fed’s spook. It appears traders decided to unwind tokens sitting atop better long-term profits than Bitcoin. For instance, Ether’s returns in the last 12 months — even after the Fed-led drop — came out to be around 175%. On the other hand, Bitcoin’s profits were nearly 15.75% in the same period.Performance of top fifteen cryptocurrencies. Source: MessariSimilarly, Ethereum’s top rival Solana (SOL) also logged more losses than Bitcoin, dipping by more than 13.75% after the Fed news. Nonetheless, its 12-month profits came out to be more than 7,500%, signaling further extreme corrections if the crypto market’s bias remains skewed toward the bears.ETH/BTC reaches key rebound levelEther also plunged against Bitcoin, according to the performance of a widely-traded instrument, ETH/BTC, in the past 24 hours.The pair dropped by a little over 5% to hit 0.077 BTC. In doing so, it also reached a critical support level near 0.078 BTC that has recently been instrumental in keeping Ether bullish against Bitcoin by limiting the former’s downside bias.ETH/BTC daily price chart showing its key support level. Source: TradingViewMeanwhile, the 0.078 BTC-support also appeared to be the lower trendline of Ether’s descending triangle. Descending triangles are continuation patterns that typically send the price in the direction of its previous trend after a consolidation period.That increases Ether’s potential to remain stronger than Bitcoin in the long run, as long as it breaks above the triangle’s upper trendline with convincingly higher volumes.Too soon to fear the FedFor months, Fed officials were stuck to the opinion that higher inflation in the U.S. drew its inspiration from supply-chain bottlenecks, with chairman Jerome Powell asserting that it would resolve by itself. But in the latest meeting, he showed less conviction toward the so-called “inflation-is-transitory” narrative.That is primarily because the U.S. consumer price index (CPI) reached a nearly 40-year high in November 2021, hitting 6.8% year-over-year. Meanwhile, core consumer prices, which exclude energy and food categories, rose to 4.7% from a year earlier; it came to be above the Fed’s preferred inflation target of 2%.”There’s a real risk now, I believe, that inflation may be more persistent and…the risk of higher inflation becoming entrenched has increased,” said Powell on Dec. 15 last year after concluding the FOMC meeting.U.S headline inflation over the years. Source: Bloomberg, Bureau of Labor StatisticsMadison Faller, a global strategist at JPMorgan Private Bank, told Bloomberg that investors should not fear the Fed, noting that their three planned rate cuts in 2022 would do little in curbing down consumer prices. Excerpts from her statement:“Growth and inflation will be decelerating throughout 2022, but nonetheless remain above historic trend levels. We think this will call for a much lower risk of a Fed-induced material market correction.”As Cointelegraph also covered, fears of persistently higher inflation, which, in turn, tends to devalue cash, have prompted mainstream investors to park their money in the crypto sector. For instance, Thomas Peterffy, the billionaire founder of brokerage firm Interactive Brokers Group Inc., admitted that he holds 2-3% of his net assets in crypto just in case the fiat money “goes to hell.” Likewise, Bridgewater Associates founder Ray Dalio revealed last year that his investment portfolio contains Bitcoin.The outlook against inflation promised to offer some respite to Ether, which tends to tail the Bitcoin price movements. Meanwhile, Sean Farrell and Will McEvoy, strategists at Fundstrat Global, noted that investors should increase their investments across the smart contracts sector to get the most from the next market rebound.”Given the current macro backdrop, leverage within the Bitcoin market, and recent robustness seen in the altcoin market, we think it’s appropriate to be overweight Ethereum and other smart contract platforms,” they said in a note, adding:”We probably would not bet the farm near-term on Bitcoin but think there is an opportunity in going long volatility via derivatives strategies.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Billionaire Ray Dalio recommends ‘reasonable’ 1%–2% Bitcoin allocation

Hedge fund manager Ray Dalio remains bullish on Bitcoin (BTC) in 2022, listing three primary reasons why Bitcoin is “impressive.” In a recent interview with The Investors Podcast, he talked up gold and BTC as an inflation hedge.When prompted by interviewer William Green about what a sensible allocation for a layperson would be, Dalio said that he agrees with fellow billionaire Bill Miller’s suggestion that 1%–2% is the right allocation. He explained that the network has never been hacked; it has no better competitor; and BTC adoption rates would suggest that it could further chip away at gold’s market capitalization:“Bitcoin now is worth about $1 trillion, whereas gold that is not held by central banks and not used for jewelry is worth about $5 trillion. When I look at that, I keep that in mind because I think, over time, inflation hedge assets are probably likely to do better.”The founder of the world’s largest hedge fund, Bridgewater Associates, Dalio echoed comments made last year during the recent interview with the podcast, saying he was impressed that Bitcoin has survived the past decade while reiterating that he is “not favorable to cash.” Related: There’s a Bitcoin boom among Baby Boomers, reports BTC MarketsDalio did caveat his musings on the rise of Bitcoin, highlighting the zealotry surrounding the Bitcoin community as being a possible Achilles heel, and as is to be expected for the investor known as “Mister Diversification,” he also asked a broader question regarding digital assets:“When does somebody collect, take the money they made in Bitcoin and then diversify that and, in other words, move to other things?”He waxed lyrical about nonfungible tokens and other coins as potential diversification destinations. For the moment, however, BTC occupies a place in his “inflation hedge asset class” alongside gold.

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3 reasons why Ethereum can reach $5,000 in Q1

Ethereum’s native token Ether (ETH) has plunged by more than 20% after establishing its record high at around $4,867 on Nov. 10, 2021. Nonetheless, the sharp price pullback does not mean ETH can’t pursue a new record high in the next few months, as several widely-tracked technical, macroeconomic and on-chain indicators suggest. One of these indicators envisions Ether’s price reaching $5,000 in the first quarter of 2022 while others look are poised to support the bullish bias.ETH price painting falling wedgeEther’s recent price correction is painting a potential classic bullish reversal pattern known as “falling wedge.”In detail, falling wedges begin wide at the top but contract as the price moves lower. As a result, the price action forms a conical shape that trends lower as the reaction highs and reaction lows converge. Traders realize a bullish bias only after the price decisively breaks above the wedge’s resistance.As a result, expectations remain high that the ETH price would break above its falling wedge resistance in the coming sessions. In doing so, it would rise by as much as the maximum distance between the wedge’s upper and lower trendline when measured from the breakout point. Literally unchanged…$ETH is going to $5k pic.twitter.com/11mAQiJxJS— Kong Trading (@KongBTC) January 4, 2022That roughly puts the price target for Ether at $5,000.ETH deposits to exchanges dropTraders typically move their tokens to exchanges when they intend to sell/trade them for either fiat, stablecoins or other cryptocurrencies. Generally, a higher number of transactions made to crypto trading platforms reflects a high selling sentiment in the market. Conversely, if the token transactions plunge, they show a strong holding sentiment in the market.Data collected by blockchain analytics service Glassnode show that the number of on-chain Ether deposits to exchanges dropped to its 23-month low on Jan. 3.ETH number of exchange deposits. Source: GlassnodeAdditionally, another Glassnode metric that tracks the number of Ether addresses sending ETH to exchanges also reported declines over the last 30 days, the same period that saw the ETH/USD rate dropping nearly 11%.Ethereum number of addresses sending to exchanges. Source: GlassnodeMeanwhile, the total Ether balance across all the exchanges has been in a downtrend since Aug. 2020, suggesting that ETH investors are in it for the long haul as its price rose from nearly $400 to a little over $3,800 in the same period.Ethereum balance on exchanges. Source: GlassnodeCheap money here to stay? Ether’s $1,000-plus plunge from Nov. 2021 to date came majorly in the wake of the Federal Reserve’s hawkish turn.The U.S. central bank decided to accelerate the unwinding of its $120 billion a month asset purchase program, followed by three rate hikes in 2022 from its near-zero levels, to stem rising inflation. Its loose monetary policy was one of the primary catalysts behind similar price rallies across Ethereum, Bitcoin (BTC) and other crypto markets.ETH/USD and BTC/USD weekly price chart. Source: TradingViewBut the Fed’s efforts to tame inflation from its current 6.8% level with three rate hikes may not impact Bitcoin and Ethereum prices in the long run. For example, Antoni Trenchev, managing partner of crypto lender Nexo believes that cheap money is here to stay. “The No. 1 influencing factor for Bitcoin and cryptocurrencies in 2022 is central bank policy,” he told Bloomberg. He added:“Cheap money is here to stay, which has huge implications for crypto. The Fed doesn’t have the stomach or backbone to withstand a 10%–20% collapse in the stock market, along with an adverse reaction in the bond market.”Hungarian-born billionaire Thomas Peterffy also said that investors should allocate at least 2%–3% of their net portfolio to cryptocurrencies like BTC and ETH in case the fiat money “goes to hell.” Related: More billionaires turning to crypto on fiat inflation fearsAdditionally, Bridgewater Associates founder Ray Dalio revealed that he has been holding BTC and ETH in his portfolio against the risks of cash devaluation led by higher inflation.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin is new gold for millennials, Wharton finance professor says

Bitcoin (BTC), the world’s most-valued cryptocurrency, has replaced gold as an inflation hedge for young investors, according to Wharton’s finance professor.Gold’s performance was “disappointing” in 2021, Wharton School finance professor Jeremy Siegel said in a CNBC Squawk Box interview on Friday.On the other hand, BTC has been increasingly emerging as an inflation hedge among younger investors, Siegel argued:“Let’s face the fact, I think Bitcoin as an inflation hedge in the minds of many of the younger investors has replaced gold. Digital coins are the new gold for the Millennials. I think that the story of gold is a fact that the young generation is regarding Bitcoin as the substitute.”Siegel also reminded that older generations witnessed how gold had soared during the inflation of the 1970s. “This time, it is not in favor,” he added.Gold, which traditionally emerged as an asset class providing a hedge against inflation, failed to meet investors’ expectations in 2021, recording its worst year since 2015 and dropping around 5% to close the year at $1,800. Despite massive price fluctuations over the course of 2021, BTC had surged around 70% by the end of 2021.Related: More billionaires turning to crypto on fiat inflation fearsSeveral prominent global investors supported BTC over gold in 2021, with Dallas Mavericks owner Mark Cuban arguing that Bitcoin was “better than gold” in October 2021. Starwood Capital Group co-founder Barry Sternlicht also said that gold was actually “worthless” and that he is holding BTC because every government was printing massive amounts of money.But despite BTC becoming an increasingly popular asset against gold, many financial and crypto experts believe that it is yet to prove inflation hedge status.

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What BTC price slump? Bitcoin outperforms stocks and gold for 3rd year in a row

Bitcoin (BTC) may be down over 30% from its record high of $69,000, but it has emerged as one of the best-performing financial assets in 2021. BTC has bested the United States benchmark index the S&P 500 and gold.Arcane Research noted in its new report that Bitcoin’s year-to-date performance came out to be nearly 73%. In comparison, the S&P 500 index surged 28%, and gold dropped by 7% in the same period, which marks the third consecutive year that Bitcoin has outperformed the two.Bitcoin vs. S&P 500 vs. gold in 2021. Source: Arcane Research, TradingViewAt the core of Bitcoin’s extremely bullish performance was higher inflation. The U.S. consumer price index (CPI) logged its largest 12-month increase in four decades this November.“Most economists didn’t see the high inflation coming, as witnessed by the 1-year ahead consumer inflation expectations,” the Arcane report read, adding:“With its 73% gain in the highly inflationary 2021, Bitcoin has proven itself to be an excellent inflation hedge.”Inflation 2021: Actual CPI vs. Expected CPI. Source: BLS, New York FedBitcoin holdings grew among institutional investment vehiclesLoose monetary policies and a sustained fear of higher inflation also prompted mainstream financial houses to launch crypto-enabled investment vehicles for their rich clients in 2021.Arcane reported an inflow of 140,000 BTC (~$6.56 billion) across spot- and future-based Bitcoin exchange-traded funds (ETF) and physically backed exchange-traded products this year.Bitcoin exchange-traded fund holdings. Source: ByteTree, Arcane ResearchThat prompted more Bitcoin units to get absorbed into investment vehicles, underscoring a greater institutional demand for the cryptocurrency.In contrast, gold-backed ETFs witnessed an outflow of $8.8 billion in 2021, according to the World Gold Council’s report published this December.Global gold-backed ETF flows. Source: World Gold CouncilVolatility behind superior performance?Nonetheless, Bitcoin’s relatively superior performance in 2021 has included periods of high volatility. Many analysts believe that extreme price fluctuations keep Bitcoin from becoming an ideal inflation hedge. That includes Leonard Kostovetsky, a finance professor at Boston College, who recalled in his blog post that there have been 13 days in 2021 when BTC’s price has moved over 10% in one direction. He wrote:“It seems strange to think that a person who is worried about holding dollars because they lost 7% of their value over the last year would be comfortable holding Bitcoin which could (and often does) lose that much value in a single day.”Arcane, too, recognized Bitcoin for having been more volatile than the S&P 500 in 2021, noting that the cryptocurrency “behaved like a risk-on asset” by merely amplifying the most significant stock market movements.The researcher cited VIX, a measure of the expectation of volatility based on S&P 500 index options, to exemplify the relationship between Bitcoin and stock markets. It noted that BTC’s price fell hard whenever VIX readings spiked in recent times, underscoring that institutional traders viewed Bitcoin as a risk-on asset.Bitcoin vs. VIX. Source: Arcane Research, TradingViewAs a result, Bitcoin’s potential to fall harder in the wake of a stock market correction also became higher. Arcane also noted that a bearish 2022 for the S&P 500 may end up wiping a big portion of Bitcoin’s gains.“Therefore, be aware of stock market headwinds in the next year and their possible implications for bitcoin’s short-term price trajectory,” it added.Related: Arcane Research releases its crypto predictions for 2022But Aristides Capital managing member Chris Brown went far in predicting an all-and-all Bitcoin doom in 2022. He stated that cryptocurrencies could face massive selloffs ahead as the U.S. Federal Reserve ends its $120-billion-a-month asset-purchasing program followed by three rate hikes next year.BTC/USD weekly price chart vs. Federal Reserve balance sheet. Source: TradingView “If the Fed really does hike rates enough to make money considerably less loose, or if markets believe they will, you are going to see certain areas of speculation come to a screeching halt,” Brown said, adding:“The prime example of such asset speculation is cryptocurrency; here lies $2.64 trillion of ‘wealth’ that is backed by nothing and generates no cash flows.”The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin rises above $51K as the dollar flexes muscles against the euro

Bitcoin (BTC) regained its bullish strength after reclaiming $50,000 last week and continued to hold the psychological level as support on Dec. 27. Meanwhile, its rival for the top safe-haven spot, the U.S. dollar, also bounced off a critical price floor, hinting that it would continue rallying through into 2022.Triangle breakoutThe U.S. dollar index (DXY), which measures the greenback’s strength against a basket of top foreign currencies, has been trending towards the apex of a “symmetrical triangle” pattern on its daily chart. In doing so, the index has been treating the structure’s lower trendline as its solid support level, thus hinting that its next breakout would resolve to the upside.DXY daily price chart featuring symmetrical triangle setup. Source: TradingViewShould a symmetrical triangle breakout occur, the technical profit target for bulls will be as high as the maximum distance between the structure’s upper and lower trendlines when measured from the breakout point. That puts the dollar en route to roughly 97.80 in the coming session.Weaker euro behind dollar’s strengthThe bullish outlook for the greenback appears against the prospects of the Federal Reserve’s tapering plans. Notably, the U.S. central bank signaled earlier in December its willingness to tighten its ongoing monetary policy faster than expected, adding it would follow up with three rate hikes in 2022.Meanwhile, the recent strength in the dollar index, in part, came due to an ongoing cash glut in the eurozone. A wave of stimulus programs initiated by the European Central Bank (ECB) in the wake of the COVID-19 pandemic left eurozone banks with excessive cash, financial researcher FactSet noted.EUR/USD daily price chart featuring its downtrend since May 2021. Source: TradingViewAs a result, these banks have been now exchanging their extra euros for dollars via the Fed’s reverse repo facility, which offers them 0.05% interest for parking cash, which is better than the short-dated European government debt that comes with negative yields. On Dec. 20, nearly $1.7 trillion flowed into the Fed’s repo facility, the highest one-day cash injection to date.Daily inflows into the Fed’s reverse repo facility rising since May 2021. Source: Federal Reserve Bank of New York Bitcoin’s summer fractal anticipates bull runBitcoin’s latest rise above $51,000 comes as its price tests a multi-month upward sloping trendline as support, as shown in the chart below.BTC/USD daily price chart featuring ascending trendline support. Source: TradingViewNonetheless, BTC price now faces resistance in its 50-day exponential moving average (50-day EMA). The same velvet wave was instrumental in capping Bitcoin’s rebound attempts in November. So the chances of bulls reeling under its pressure are high.But on larger timeframes, there appear possibilities that Bitcoin would continue its bull run further into 2022. For instance, an independent market analyst, Rekt Capital, highlighted the cryptocurrency repeating a trend from its May–July session that later sent its prices to an all-time high of $69,000.”Bitcoin continues to consolidate inside a range formed by two Bull Market EMAs: the green 21-week EMA resistance and the blue 50-week EMA support,” the pseudonymous analyst explained, adding:”Bitcoin formed a similar range inside these two EMAs earlier this year in May (orange circle).”BTC/USD weekly price chart featuring “bull market EMAs” fractal. Source: TradingViewOn the flip side, should Bitcoin break below its 50-week EMA, its likelihood of testing its orange 200-week EMA will become higher based on a similar fractal.BTC/USD weekly price chart featuring 200-week EMA support. Source: TradingViewCurrently, the 200-week EMA sits around $24,250.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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