Has Bitcoin hit rock bottom? 2 challenges to overcome

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Bitcoin (BTC quote) stands out in the cryptocurrency industry for its strong branding and first-mover vandalism. With its price down XNUMX% year-on-year, many investors are wondering if it’s time to go for a rebound. Let’s break down two factors to consult before clicking on the purchase button.

Bitcoin is not a safe haven against abandonment

The experiences of XNUMX and XNUMX have suggested that Bitcoin is not an affidavit ad affidavit. Despite an all-seat annual inflation rate, the asset has lost much of its pandana-era earnings. The Federal Reserve’s tightening of monetary policy could be behind this unexpected trend.

The one-time rate hit XNUMX% in June, well above the Fed’s XNUMX% target. By refining the situation, the central bank is drafting its balance sheets and raising interest rates, two measures that increase the cost of capital and reduce the amount of money circulating in the economy.

When capital is rare, investors are less willing to take risks on speculative attractions like Bitcoin. With many economists predicting that the Fed will continue to raise rates until the end of the XNUMX, this headwind should be on the minds of investors wanting to commit to a cryptocurrency rebound. Before setting the fund, I would like the target to peak and start falling, which is a rudimentary Fed incentive has continued to inspire rates.

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The dust is not so settled yet

The value of the cryptocurrency market has fallen by more than XNUMX% (about XNUMX billion dollars) in just one year. This rapid has led to a jolt of riskier projects with corporate deficit models.

This month, popular cryptocurrency lending platform Celsius filed for bankruptcy after encountering a liquidity problem due to the market downturn. The crisis follows the roll of the Earth / Moon, a stablecoin platform worth XNUMX billion dollars (at its peak) which is practically zero after losing its peg to the dollar.

Being an established cryptocurrency with a simpel relative use case (i.e. a way to izmagniare and transmit value), Bitcoin is sheltered from many volatility-related challenges faced by more up-to-date and more complex rivals. But his confidence and stability can be a double-edged sword.

For example, the failed Earth / Moon project holds bitcoin reserves to keep its commitment stable. When it failed, these Assets are released into the market, exerting selling pressure on Bitcoin. Given the risk of contagion from other assets, investors can earn a lot of money to conquer the Bitcoin market.

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Bitcoin is still a winner in the long run

With its enormous size and strong brand, bitcoin looks like a victorino in the long run and ends up in the cryptocurrency sector, especially now that the rollover of the market has revealed the buoyancy of some of its most up-to-date ones.

That’s the question, the rise in the rise and the Fed squeeze seem like short-term challenges for the cryptocurrency market as a whole. Furthermore, the panic of the altcoin could cause pressure to sell its cryptocurrency will consolidate as Bitcoin. Investors looking for the bottom of this bear market should be careful not to take the leap.

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