Bitcoin Gets a Bit of Optimism to Cap an Otherwise Dismal Week for Crypto

[ad_1]

Bitcoin rallied to end the week following a surprise move by BlackRock that gave a much-needed boost of confidence to the crypto industry, which has been crushed by the weight of SEC actions for several years. weeks now. Bitcoin ended this week slightly negative, down 0.21%, at $26,355.04. Coin Metrics measures a week in crypto, which trades 24 hours a day, starting at the close of trading at 4:00 p.m. ET every Friday. It was Bitcoin’s second consecutive week. Traders were bullish after BlackRock, the world’s largest asset manager, filed a spot bitcoin ETF after the bell on Thursday. The price reaction was initially muted as many traders wondered why he would make the move now when a week before, Coinbase, the crypto custodian in the bitcoin ETF offered by BlackRock, was sued by the SEC for violating securities laws. However, optimism set in on Friday. “A lot of what drives crypto prices are just expectations of what it can be used for,” said Gustavo Schwenkler, associate professor at Santa Clara University’s Leavey School of Business. “At this time, it is still unclear exactly what type of use case we will see crypto take on in the future. Allowing institutional money to flow into crypto would introduce a new type of use case for crypto. crypto that is currently unavailable, and I can see prices rising.” “If approved, it will change the perception of what crypto is good for, and it could really impact how bitcoin and other cryptocurrencies are valued,” he added. A moment of relief Bitcoin climbed around 4% on Friday, but the rest of the week wasn’t as sunny. Price action was tepid to start the week and on Wednesday bitcoin briefly fell to a March low. “FOMO is completely out of the market,” said Mark Connors, head of research at 3iQ. “So even though the tourists have gone and we’ve seen some bitcoin dominance, there’s a lot of headwinds.” “We are reviewing recession-type concerns,” he added. “You see it in the macro data, in the rate data. It’s a dodgy Thomas market for the next buyer of bitcoin right now. You’re down to the people who are the top holders, you see it in wallet traffic, which is very low on large holders, and you see on exchanges: that next layer isn’t there because the volumes aren’t there.” Bitcoin fell below $25,000 for the first time since March after the Federal Reserve’s June meeting. The central bank skipped a rate hike in June, but Fed Chairman Jay Powell said there could be two more increases this year. The SEC lawsuits against Coinbase and Binance the previous week also continued to weigh on investors. “Bitcoin and digital assets had one of the best returns of any asset class in 2023 and flows are minimal to low,” Connors said. “That divergence, where yields don’t attract dollars, that’s as strong an indicator of sentiment as you can get, and that’s one of the reasons we’re in the bottom quartile of sentiment in this class. assets.” Miner profitability Bitcoin’s recent declines may not be entirely due to macroeconomic and regulatory headwinds, said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. The recent movement of bitcoin from miner wallets to exchange wallets increased at the end of this week, and the amount of bitcoin sent to exchanges is at a level not seen since October 2021, according to Glassnode. “This indicates that miner profitability from bitcoin’s block reward may decline due to the coin’s declining price and increasing mining difficulty,” Hasegawa said. “They are slowly unloading their bitcoin holdings, limiting bitcoin’s upside potential in the process.”

[ad_2]