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On the brink of recession: Can Bitcoin survive its first global economic crisis?

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Downward movement: what will happen to the collapsed bitcoin. What does the future hold for the world’s main cryptocurrency?


Bitcoin is going through a difficult time right now. In two weeks, the cryptocurrency has fallen in price by 33% and is trading at $21,000. Investors are concerned about whether digital money is still worth trusting and whether it’s time to exchange it for euros or rubles. On the other hand, there is a temptation to invest heavily in the hope that bitcoin will win back the fall and bring in a tangible profit.


The wave of declines began on June 7, when the asset was trading at $31,500. The cryptocurrency steadily fell in price over the next nine days, falling to 21 thousand. As a result, bitcoin lost a third of its value.


According to U.S. cable and satellite business news channel CNBC, BTC is falling amid a general sell-off in risky assets. Today, its capitalization fell to below $425 billion, and the total capitalization of the cryptocurrency market fell below the one trillion U.S. currency mark for the first time since February 2021.


Thus, investors lost about $200 billion. As a result, the largest cryptocurrency exchange Binance experienced technical problems on June 13, and the withdrawal of bitcoins to users’ wallets was temporarily suspended.


“Technical services will fix the malfunction within 30 minutes,” Binance CEO Changpeng Zhao wrote on Twitter.


He later acknowledged that it would take “a little longer” to fix the glitch. In fact, problems at the crypto exchange persisted for more than three hours. On the same day, cryptocurrency platform Celsius announced the suspension of withdrawals due to “exceptional market conditions.”


Bitcoin, like any other financial instrument, is affected by the current macroeconomic situation. The COVID-19 pandemic has hit the global market powerfully. But as the coronavirus receded, economic indicators rose. The cryptocurrency also rose in value: by November 2021, it reached its historic high with a rate of $70,000. However, not for long.  


The start of the Russian invasion of Ukraine led to a huge jump in commodity prices and inflation, which has not been seen in almost 40 years. Under such conditions, investors lose confidence in the markets and prefer to disinvest, which obviously leads to a drop in prices, which in some cases can become a real collapse.


At the same time, throughout the year it is seen that the situation of bitcoin is highly dependent on the situation in the U.S. stock market. Against the backdrop of record inflation in the United States, the U.S. financial regulator is tightening its monetary policy and increasing the rate. This also leads to a sell-off in the crypto market.


Investors at such a difficult time for the whole world want to save their funds, and bitcoin and cryptocurrencies in this regard are still not the ideal tool.


The key disadvantages of cryptocurrencies are the lack of clear and transparent rules regulating their circulation and their physical limitations. For example, most bitcoins are already in free circulation, and therefore additional issues due to a sharp increase in demand do not have to wait.


Everyone associated with cryptocurrencies today is worried about one question – what will happen to them next? Bitcoin will continue to fall to 10-15 thousand dollars and then it may bounce back up. Until the war in Ukraine is over and the prices of raw materials return to their previous levels, U.S. stocks are unlikely to recover, which means bitcoin will not grow either.


It is important to understand that this whole situation is temporary: there have been much worse crises in the past, including bitcoin, but markets still recovered. Sooner or later, especially when the global macroeconomic context returns to a favorable state, bitcoin will start climbing to its historical highs.


The cryptocurrency era is still far from its sunset. However, in the next 5-7 years, their positions may be shaken by digital counterparts of traditional currencies. For example, the Bank of China is actively experimenting with the digital yuan. Russia is developing the digital ruble, and other countries are increasingly turning to such instruments.


The ideas of launching their own digital currencies in different countries around the world are related to the fact that cryptocurrency cannot be fully controlled. But in general – it is convenient. And the current global economic situation is forcing many governments to look more favorably toward bitcoin and its counterparts. Eventually, more and more people will begin to understand the promise of this market.


Meanwhile, bitcoin’s low exchange rate makes many potential investors ponder whether it is worth investing in this and other cryptocurrencies right now. After all, if their rate goes up soon, the investment can make a profit.


Of course, in this case, investors who invested in bitcoin at its bottom will be able to make good profits. But now it is more of a long-term investment: in the short term, cryptocurrencies are unlikely to generate returns.


From an investor’s perspective, cryptocurrencies will remain a high-risk market. This means that investing in cryptocurrencies can bring significant gains as well as a one-time collapse. When making decisions about investing in cryptocurrencies, it is worth remembering that this market is highly volatile. Consequently, a speculative strategy that invests for a short period of time and closes at the slightest hint of a decline may be more effective.


Over the next 3-5 months, the cryptocurrency market will continue to experience high volatility. In this regard, ordinary investors should be advised not to rush to buy bitcoin or its analogues. But to carefully analyze the situation and decide to buy only if all the risks of such investments are calculated as much as possible. And, of course, to invest available funds, not the last.

Cryptocurrency

Institutional crypto asset products saw record weekly outflows of $423M

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Institutional crypto asset products saw record weekly outflows of $423M

Digital asset investment products saw record outflows totaling $423 million last week, with institutional investors from Canada representing nearly all of the carnage.

According to the latest edition of CoinShares’ weekly “Digital Asset Fund Flows” report, Canadian investors offloaded a whopping $487.5 worth of digital asset products between June 20 and June 24.

Flows by Asset: CoinShares

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Cryptocurrency

‘Crypto is just like the end of the 90s with the internet bubble,’ says Hodl CEO Maurice Mureau

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‘Crypto is just like the end of the 90s with the internet bubble,’ says Hodl CEO Maurice Mureau

For Maurice Mureau, CEO of crypto investment fund operator Hodl, there’s “not a lot left” to invest in anymore. With soaring inflation, bonds are no go, real estate is getting more difficult but there is one asset class that’s (unsurprisingly) catching the fund manager’s attention — cryptocurrencies. During the European Blockchain Convention in Barcelona this week, Cointelegraph editor Aaron Wood sat down with Mureau, who gave his insight on the outlook of the digital assets investment landscape.

“It’s just like the end of the 90s with the internet bubble, so you’re still early in the space,” said Mureau. “A very solid use case for crypto is becoming apparent in the gaming industry, where people invest time that you can earn from it, and that’s all arranged by the blockchain.” He reiterated that there would be only 21 million Bitcoin in existence with no more printing. Therefore, alluding to hyperinflation in Turkey and Argentina, Mureau said that central banks can’t print more of the digital currency. “So that, for me, makes for a very safe hedge. Thirty percent volatility in asset prices can be bad, but not if you lose 70% on your local currency’s purchasing power each year.”

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Final Capitulation — 5 reasons why Bitcoin could bottom at $10,000

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Final Capitulation — 5 reasons why Bitcoin could bottom at $10,000

Bear markets have historically been challenging to navigate for traders and the conventional set of “reliable” indicators that determine good entry points are unable to predict how long a crypto winter might last.

Bitcoin’s (BTC) recent recovery back above the psychologically important price level of $20,000 was a sign to many traders that the bottom was in, but a deeper dive into the data suggests that the short-term relief rally might not be enough proof of a macro-level trend change.

BTC/USD price normalized since all-time high (Current vs. 2017 peak) source: Delphi Digital
ETH/USD price percent drawdown (current vs. prior ATH). Source: Delphi Digital
BTC/USD weekly price vs. 14-week RSI. Source: Delphi Digital
BTC/USD price vs. 200-week SMA and 14-week RSI. Source: Delphi Digital
Crypto Fear & Greed Index. Source: Alternative
BTC/USD vs. Fed funds rate vs. Fed balance sheet. Source: Delphi Digital
BTC/USD price vs. percentage of supply in profit. Source: Delphi Digital

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