Since the cryptocurrency’s withdrawal in early May, investors in digital coins have sold out their tokens and bought Bitcoin at a pace not seen in almost a year.
Currently trading over $ 31,200, up more than 4% in the last day, Bitcoin, the world’s largest cryptocurrency by market value, now accounts for 47.3% of crypto’s total market value, according to TradingView. Bitcoin has not played such a dominant role in investors’ portfolios since July 30, 2021, when the asset was traded above $ 42,000.
The rising value relative to crypto’s total market value suggests that investors are seeking it as a safer investment during a period of contraction, which Gemini co-founders Tyler and Cameron Winklevoss have considered the “crypto winter.”
“Bitcoin is probably the most volatile major asset in history,” Andy Edstrom, CEO of advisory services with Swan Bitcoin, a bitcoin trading app, told Yahoo Finance. “But the reality is that volatility has declined over the many years it has existed.”
Bitcoin supporters were created during the financial crisis of 2007-2009, and originally envisioned it as electronic cash outside the monetary control of the authorities. Between the early days and now, spokesmen have changed their mindset, and most often compared it to “digital gold” as Edstrom pointed out.
While volatility has proven to be one of the main characteristics, data from Coin Metrics show that bitcoin’s whipsaw fluctuations have fallen over time.
Since December, BTC has been moving at an ever-increasing pace with the stock market, especially technology stocks with high growth. After the crypto market’s sale in early May, when the algorithmic stablecoin TerraUSD collapsed, bitcoin’s correlation with the S&P 500 has seen a sharp decline, although it remains at levels higher than at any time in 2021.
Of 54% since peaking at $ 68,789 in November 2021, the asset has performed 9% worse than Meta ($ FB), but held out 16% better than Netflix ($ NFLX) at the time. But over the past two years, value has risen 233% from $ 9,300 per coin, beating all major technology stocks outside of Tesla.
Yet bitcoin remains “strongly influenced by the macroeconomic environment,” Tom Dunleavy, a senior analyst at Messari, told Yahoo Finance, largely because of the current money-tightening cycle. Such a relationship has kept traders and investors focused on US economic events when considering short-term asset trading issues.
Potential regulation is also the key, according to Dunleavy, who is waiting for the release of a bill on two-part crypto regulation from Sens. Lummis (R-WY) and Gillibrand (D-NY), which can arrive as early as Tuesday.
As Bank of America CEO Brian T. Moniyhan previously told Yahoo Finance, large financial institutions are heavily regulated, preventing them from making significant moves into Bitcoin or other cryptocurrencies. More clarity on regulation can change their position.
After seeing increasing demand for buyers and trading volume on Monday morning, Mark Newton, a technical analyst with Fundstrat, indicated in a research note that bitcoin may have already found its short-term bottom, although money tightening will keep investors cautious.
After nine consecutive weeks of negative performance, Newton said the price of bitcoin could reach between $ 37,000 and $ 39,700 this month “before showing some consolidation in late June.”
But with recent cuts at Coinbase, Gemini and Robinhood – major crypto-trading sites planning to cut around 10% of their workforce – the digital asset industry appears to be preparing for its dreaded “crypto winter.”
It is still “too early to call” whether the crypto is heading for a muted one in the coming months, said Swan’s Edstrom, or a “multi-year downturn.”
David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.
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