Bitcoin has had a good month, something we haven’t stated in a while.
It had been falling steadily for a while, but in July, it saw its biggest monthly gain since last October, at almost 17 percent. At 57%, Ether’s monthly gain was the highest since January 2021.
This upswing mirrored that of riskier assets like equities, as traders wagered that the Federal Reserve would be less likely to raise interest rates rapidly if the economy slowed.
Since late November, the leading cryptocurrency’s correlation with the Nasdaq has been positive. Meaning they’ve been moving in the same way, in contrast to prior years when it was often negative.
The convergence in July was welcomed by Itai Avneri, the deputy CEO of the bitcoin exchange site INX.
He added that institutional investors are treating bitcoin as seriously as they would any other asset. These large financial institutions will eventually return to the cryptocurrency industry.
The market value of all cryptocurrencies returned to more than $1.15 trillion last month, an increase of almost $255 billion from the end of June, according to data compiled by CoinGecko.
According to data firm CryptoCompare, the number of digital assets managed by investment products increased by 16.9 percent to $25.9 billion in July, reversing a June drop of 36.8 percent.
However, the volume has been low. Suggesting that many investors believe it is too soon to become bullish amidst the current macroeconomic backdrop. It includes rising inflation, the prospect of a recession in the United States and Europe, and the implosion of several major cryptocurrency exchanges.
CryptoCompare found that daily average volumes for all digital asset investment products had dropped by 44.6% to $122 million, the lowest level since September 2020.
Despite the recent uptick, researchers at MacroHive noted on Friday that they are bearish for cryptocurrencies over the medium run due to inflation, recession concerns, and rate hikes.
Bitcoin’s a Long Way from $60,000
Bitcoin has been holding around the $24,000 barrier since last week. It is when it briefly surpassed that threshold and is now trading around $23,336, down from its previous high of $24,050.
Chris Terry, vice president of the lending platform SmartFi, predicts that it will stay within a tight band of about $20,000, plus or minus 10% to 15%, until there is more clarity regarding the economy’s trajectory.
The saying goes, “We might be in this stagnant market for weeks and weeks.”
However, according to Russell Starr, CEO of Valour, which develops exchange-traded products for digital assets, bitcoin could profit. It is if the United States experiences a prolonged recession and the Fed is compelled to decrease interest rates.
He predicted it would take another quarter of economic contraction before the market returned to its previous levels of prosperity (about $60,000).
GlobalBlock’s senior sales trader, Adrian Kenny, warns that the next few months could be rough for investors. Especially for those who jumped into cryptocurrency during its boom at the height of loose monetary policy during the pandemic.
For things to get back to “normal” or to expect a return to the highs of 2021, there is still undoubtedly a big mountain to climb.
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