Bitcoin just cannot seem to catch a break from its southward price trajectory this year. Currently trading at $21,454.37, the largest cryptocurrency has already slipped 51.82% in value to date in 2022. Naturally, long-term investors aka HODLers are seriously rattled.
No wonder BTC is leaving crypto exchanges in droves. The trend began shortly after the Terra-Luna crash and various bankruptcy announcements by crypto firms such as 3AC, Celsius, Voyager, and more. Major exchanges witnessed humongous outflows worth 1,19,000 BTC in June 2022.
As per Arcane research, July was no different with around 96,000 BTC being sold off. As of August 25, 65,000 BTCs have been withdrawn from all major crypto exchanges.
While that may be the case for retail investors, financial bigwigs are doubling down on Bitcoin. According to Singapore’s DBS Bank’s high-net-worth member-exclusive, digital exchange, trading activity in BTC doubled in June 2022.
Despite the market taking some heart about the US Fed slowing down on the hike of interest rates and looking slightly up, August will seemingly end on a dreary note. As per crypto insights chain Glassnode, BTC balances on crypto exchanges are already languishing at just 2,324,897.117, a four-year low.
However, Vikram Subburaj, CEO of Giottus Crypto Platform, asks investors to stay calm, but brace for another fall.
“Short-term holders of Bitcoin (BTC) have outpaced long-term holders for the first time in two years, according to research by on-chain analyst Glass node. While this suggests that new investors are considering current prices lucrative for investment, there might also be an interpretation that traders are buying to cash in on short-term rallies for quick profits.”
“We believe that BTC is in a long-term accumulation zone currently and will benefit all investors who can invest and HODL for three-five years. That said, the global macro-economic environment continues to be volatile and hence another sizable drop (>20%) in BTC is possible before the end of this year. Cost averaging daily or weekly remains a good approach for the next few months,” he continued.
ASIAN CONNECTION
A recent post by IMF suggested that Bitcoin seems to have a special affinity for the Asian equity market. As per Chainalysis 2021 Global Crypto Adoption Index, the top three countries that are acing crypto acceptance are Asian (Vietnam, India, and Pakistan).
The volatility correlation between BTC and Indian stock indices has grown 3x from 0.03 between 2017 and 2019 to 0.44 in the past two years. A higher correlation means a strong interrelatedness between the two variables. Hence, if something adversely impacts the global stock market, it will also pull crypto markets alongside.
GLOBAL DIP
The dip in crypto-markets and particularly BTC correlates highly with the lull on the global markets. At present, the crypto greed and fear index points towards extreme fear, with 27 points. This represents most investors fearful of an imminent price crash and panic selling their BTC holdings.
The CNN Fear and Greed Index too, is echoing similar sentiments. For instance, the stock momentum on S&P 500, the benchmark index is slowing, indicative of investor fear. There is also extreme greed when it comes to bonds.
Usually, people flock to it as a financial safe haven, particularly in times of economic uncertainty.
But for now, investors and traders await, with bated breath, the address of Federal Reserve Chair Jerome Powell, as it is a major driving and directing force of the global markets and consequently BTC.
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