HomeOnline IncomeProduct ReviewWebsite TricksWhat is?Why is the value of Bitcoin falling?

2 months ago (08/10/22) 1927 Views

Why is the value of Bitcoin falling?

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  • Why is the value of Bitcoin falling?

Overview
This is exactly why the crypto markets are going down. Now we are going to go into the three key reasons why?? Now we’re seeing the crypto markets tank and sell off across the board over the last week. So we’re seeing a sharp sell-off in the Bitcoin markets over the last few days. There’s a few key reason’s to going down the crypto market. We’ve seen a lot of volatility in the crypto markets and it’s important in times like these step back and see what else is going on. Not only in the crypto markets but in the wider macro market’s because it gives you a really good insight as to why crypto might be doing what it’s doing for us. A lot of you at home that don’t day trade to continue the dollar cost average nothing fundamental has changed here for Bitcoin. We’re just saying short term volatility through a number of reasons We’re seeing the macro landscape at the moment so let’s get into it.

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Price Overview
We’re seeing the overview of the market cap. There’s a lot of declining across the board, a lot of our coins down 15 to 10% and Bitcoin in the last 24 hours is down around 6% of the last seven days. Bitcoin, Etherium down 15%. So quite a sharp sell off why are we saying that if you take a step back and look at one of the biggest markets in the world which is the equities. It’s the stock market the S&P 500 that is also seeing a sharp sell-off. So we’ve seen the S&P down 1.7%, the Dow Jones down 1.2% and the NASDAQ down 2.2% over the last 24 hours which is quite substantial in the stock market.

Correlation NASDAQ vs BTC
That’s you know nothing in the crypto market stock markets quite a lot. But the stock market is quite a lot and the correlation for the past few months between Bitcoin and the S&P is finding correlation between the Bitcoin and the S&P is nearly at an all time high correlation between the two at the moment is 0.49% which is super super tight compared to the correlation of what the both markets do. If we look at this chart here. We can see the Bitcoin and NASDAQ rolling forward correlation so in the blue you’ve got the NASDAQ and the orange you’ve got Bitcoin. You could really switch the two and change the price of both to see how closely traded the accident Bitcoin and the index and Zach is. We’ve had this correlation for a long time now and we won’t see Bitcoin really come off on its own and separate from the NASDAQ and other stock markets for little while yet. And the reason Bitcoin and the NASDAQ and Equities trade so similarly is because a lot of the assets and Equities in the NASDAQ a risk on assets. A lot of macro investors when the economy starts to decline or we see rising interest rates and potentially seeing impending recession which we’ll touch on soon is that people run to the hills when there is risky macro factors in the first assets. They sell with the risk on assets that Bitcoin textiles anything that is risk in their portfolio they tend to sell and they keep their lower risk assets. So this point in time a lot of people still see Bitcoin as a risk on asset. For other people they see Bitcoin as a world reserve currency and actually something this hedge against inflation and there’s a possibility to an education you know gap.

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Bitcoin to $30k
Aurther Hayes is the founder of the BitMEX. He actually calling the Bitcoin might go to 30,000 and Ehterium to 2500. He’s currently saying that there’s an inability to recognize the clinical nature of markets any inconvenient truth is crypto is now moving in lockstep with market equities. He expects the NASDAQ to experience a significant pullback around 30 to 50% and then also lead crypto assets like Bitcoin, Ethereum to dropping value alongside it. So you can see either rising correlation of Bitcoin versus the NASDAQ and the 90 day correlation. It is an all-time high and he thinks that with this pullback of the NASDAQ in the next few months Bitcoin will follow. History doesn’t repeat but it does rhyme if we see the Federal Reserve continue to tighten up the monetary policy with the rising inflation rates.

Inflation to get Worse
Inflation is an all time high and even the White House put out a press release about saying that new inflation data will be extraordinarily elevated meaning the CPI inflation rate that came out recently of 8% could be much higher. And this is very scary because it basically means inflation would continue to increase and effects potentially raise their rates. Even more aggressively than they have pause which squeezes the amount of money in circulation because it becomes more expensive for banks and businesses to go and take out loans. Which reduces the amount of money that people have to spend and we’ve seen huge rise in the stock market over the last few years. Basically just amount of money the government is sprinting because the low interest rates it’s cheaper for people who loan money and and push into the businesses and predominantly all goes into the stock market which pushes it up. Now we’re looking of event’s where inflation is running rampant and they’d have to raise their interest rates meaning it’s more expensive to learn that money. Which slows the circulation of money in the economy which makes it harder for growth and that’s what we’re seeing the stock market sell off. And when Bitcoin continues to follow suit yeah really crazy. So it’s gonna take a little while for Bitcoin potentially to part ways with the NASDAQ and Equities will clement tweeted.

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Bond’s Breaking Out
We’re also seeing that the 10 year yieldon bonds are starting to break out after a multi-year decade. So bonds are typically something slower safer investment and people starting to move towards those risk off assets. That are you know less risky than your Bitcoin and take stocks because of you know the way that the world’s young in the moment. So as will clemente mentions here the tech affecting whether we agree with it not the market too appears to be viewing Bitcoin as a higher risk play like tech and trading at an increased correlation last month. So we continue to see we can’t correlated with those risk on assets. With the shaky metric conditions we probably just sitting back short term utility is nothing new we’ve seen this over the time and time again. For traders you unless you have material it’s probably best to just step away while the market is in hard mode. And DCA dollar cost averages are gonna dollar cost average regardless.

Final Thought
So little bit of a short term bearish viewpoint that correlation is super correlated with NASDAQ and tech stocks and with the rising inflation rates these realistic area there in the real world like things are getting more and more expensive being over in the US have really have noticed it. With the rising, interest rates it’s going to become more and more expensive for the business to loan out money and theoretically harder to grow. Employment will slow, businesses won’t grow as fast and it’ll be less additional income for people to spend. Because things are gonna get more expensive historically. People tend to protect their wealth, they save, they don’t spend as much. Which slows the growth stocks don’t grow as much businesses don’t grow as much and we see assets like you know tech stocks Bitcoin potentially take a bit of an impact. In the short term, does it change anything in the long term? No, it doesn’t. Continue dollar cost average continue to be super polish on Bitcoin. Bitcoin is a fixed supply asset in the viewpoint or the expert’s investment strategy is to start risk asset. It’s actually a risk. Because it’s a hedge against inflation. We haven’t got everyone at that point yet. So long term still super bullish but in the short term that’s what we’re gonna see price potentially continue to go down in the short term.

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