With the Bitcoin price, there are conflicting arguments regarding the market direction. While some experts believe the crypto winter is thawing, others suggest caution.
Despite the prevailing crypto winter, July ended as the best month for Bitcoin in 2022 thus far. The cryptocurrency gained 17% in July and ended at $23,000. Since 2022 started, cryptocurrencies have seen the worst decline in a decade, even as macroeconomic conditions pulled down the market.
The post-covid economic collapse and continued invasion of Ukraine by Russia have sent nations hurtling towards a recession. Consequently, many global superpowers have had to hike their interest rates to combat inflation. An unintended effect has been the collapse of the cryptocurrency market even as the market continues its movement with the stock indices.
Q2 reports suggest that the second quarter of 2022 is the worst for bitcoin in ten years. From an all-time high of over $69,000 in November 2021, Bitcoin crashed to as low as $17,500 in June. However, in July, it reached a six-weeks high of around $24,500, retracing to $23,000. Likewise, Ethereum, which crashed to $994 in June gained and ended July with $1683.
Analysts suggest that the decision of the Fed to raise interest rates by 75 basis points instead of 100 basis points played a part. Also, Jerome Powell announced that contrary to popular opinion, the U.S economy was not in recession. Given that the market has already priced in for worse news, the announcements gave crypto a soft landing and caused a price hike.
Is the Crypto Winter Over?
With the Bitcoin price, there are conflicting arguments regarding the market direction. While some experts believe the crypto winter is thawing, others suggest caution.
Market analyst at Oanda, Edward Moya, believes the market is ready to reverse. Moya pines that this will allow capital injection into the ecosystem. Binance CEO Changpeng Zhao has also suggested that the growth of stablecoins was a bullish development.
Contrarily, indicators suggest it is not yet time for a bull run. Data from Coinglass suggests that August and September are typically bearish months, and one can expect the same this year. Analysts predict a total reversal will not begin until October.
Dileep Seinberg, Founder & CEO, MuffinPay, noted the market is not there yet. While acknowledging the price hike was a relief rally, he said that “crypto is not immune to global factors or economies of the world.”
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