Bitcoin Surge Parallels Price Movement in 2019: Analyst

[ad_1]

Vetle Lunde, a crypto markets analyst at K33 Research, sees parallels between bitcoin’s recent surge since the 2022 doldrums and its price structure from 2018 to 2019.

In an interview on CoinDesk TVs First Mover program on Monday, Lunde said, “The current pullback and recovery stage is remarkably similar to 2019, both in duration and price movement.

In a research note to clients last week, Lunde wrote that bitcoin could hit $45,000. BTC was currently trading at around $29,440, down 2%, although it was up around 80% in 2023. The rebound follows a year of distress, in which several large companies declared bankruptcy , sending timid investors fleeing the crypto markets.

We have seen throughout the latter part of 2022 a lot of forced selling, as well as investors becoming cautious, Lunde said. This led people to be underexposed. And also made a lot of people short (crypto) be conservative by adding exposure. It creates this momentum where bitcoin feeds off your short squeezes and moves higher.

He added that negative to neutral sales of derivatives, despite recent price increases, were further signs of investor caution. This sentiment could change, even if the relatively low liquidity of the markets remains a potential weight on future prices.

Lunde thinks faint signs last week that the US central bank would scale back its hawkish monetary policy amid mildly encouraging inflation data could boost market sentiment.

He blamed crypto prices last year partly on companies that overexposed themselves when interest rates were zero.

It was a lot of spending, a lot of focus on growth, Lunde said. So you had this environment where miners were taking a lot of fiat that had a lot of bitcoin in it and then being exposed to falling prices, on top of all the crypto banks starting to neglect due diligence.

But the industry-wide crisis of 2022, which included several major companies declaring bankruptcy, including crypto hedge fund Three Arrows Capital, has already benefited markets by weeding out bad actors, Lunde suggested. Many of these rotten fruits have been eliminated from the market, he said. Thus, the entire market is currently in a more robust phase where it can sustain higher interest rates for longer.

He added: The industry has learned. I’m pretty sure we’ll see similar crises in the future, unfortunately. But for now, these types of risks seem to be eliminated from the market. So the market feels a lot safer right now.

[ad_2]