A collapse or a new high. What will happen to the cryptocurrency market by the end of the year

Financial analyst at Currency.com cryptoexchange Mikhail Karkhalev in the author's column at topplabs.org spoke about the prospects of bitcoin for the coming months and the likely start of a new season of altcoins On the …

Financial analyst at Currency.com cryptoexchange Mikhail Karkhalev in the author's column at topplabs.org spoke about the prospects of bitcoin for the coming months and the likely start of a new season of altcoins

On the evening of October 6, the bitcoin rate on the Currency.com crypto exchange updated its maximum since mid-May at around $ 55.7 thousand. The cryptocurrency rose sharply by almost 10%, but could not stay above $ 55 thousand. As of October 7, 19:55 Moscow time, bitcoin is traded at the level of $ 54.1 thousand

Mikhail Karkhalev, financial analyst at Currency.com cryptoexchange

Three main factors, known at the moment, led to the rise in the value of bitcoin:

  1. General market sentiment and the situation in the world economy. At first glance, it may seem that these are different things, but it is the difficult economic situation that pushes investors to invest in risky assets, including cryptocurrencies, which leads to the accumulation of bitcoins by long-term holders, an inflow of capital to the crypto market, the development of DeFi and NFT directions;
  2. Most recently, the SEC (US Securities and Exchange Commission) announced that it has no plans to ban cryptocurrencies and in any other way "nightmare" the industry. On the contrary, the Commission is trying in every possible way to help investors secure their investments by correct and flexible regulation of the crypto market. Given the increased demand and interest from corporate and institutional investors, as well as a couple dozen ETFs pending approval, the market desperately needs regulation, not a ban;
  3. A large investor bought $ 1.5 billion worth of bitcoins on the exchange, and not on the OTC market, at a time when there were only $ 17 million in short positions.This led to a sharp and impulsive rise in the BTC rate from $ 52 thousand to $ 55 thousand.

In my opinion, bitcoin has every chance to renew its historical maximum of $ 64.9 thousand already before the November meeting of the FRS. At the same time, if nothing supernatural happens at the meeting, everything will be as expected or suddenly softer than expected, which is good for risky asset markets, then by the end of the year, with a high degree of probability, Bitcoin will update ATH.

"The market situation is shaping up in favor of growth"

At least outside the context of traditional economics and the Fed's monetary policy, the situation in the crypto market is solely in favor of growth. If two Chinese "crypto-nightmares" could not stop bitcoin, and the SEC does not plan to ban crypto-currencies, what could hinder growth? Perhaps the sudden sell-offs of large bitcoin holders, but in my opinion, they have not yet earned enough to start the sell-off.

I believe that until the end of this year, it is worth waiting for a new season of altcoins if bitcoin continues its bullish rally, since the market always follows the dynamics of bitcoin and is very dependent on the sentiment of investors who use BTC. Perhaps the new alt season starts a little earlier than bitcoin continues to grow. However, even in this case, growth will be associated with good sentiment for Bitcoin.

"I would not count on a global correction"

There is a likelihood of a global correction, but it can hardly be called high. Much will depend on the November meeting of the US Federal Reserve, at which it is planned to begin to cut the quantitative easing (QE) program and curtail emergency stimulus. These procedures have already been incorporated by the market into the price after the September meeting and the subsequent correction. However, if the Fed does something beyond what it promised, that is, adopts a more "hawkish" position, then the markets for risky assets will go down.

The Federal Reserve is well aware of this, therefore, in order not to cause a collapse in the markets, it will act as carefully as possible. I would not count on a global correction until the next crisis, which, I am sure, will have to wait at least 5-7 years. Markets will slow their growth as monetary policy tightens, yes, periodically turbulence in the markets will increase, but there will be no collapse. In the end, the economy, although stalled, is still recovering. The European Union has no plans to soften monetary policy so far, and QE is even thinking of increasing it after the curtailment of the emergency stimulus program. There are no reasons for the collapse.

If, nevertheless, a global correction begins, then like all assets in principle, bitcoin will also fall in price. Bitcoin is an excellent asset for preserving value and increasing capital in the long term, as well as an attractive speculative instrument. However, Bitcoin lacks the functions of a defensive asset given its volatility.

Making bitcoin a defensive asset is more of an attempt at wishful thinking. Until the moment when bitcoin becomes a truly protective asset, it is still very, very far away.

The message contains information about the movement of the market, is not an investment research, should not be considered as investment advice and is a subjective point of view on the subject of the message of the author of the material. Past performance is not a reliable indicator of future price movements.

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