Another Red Daily Close Puts Bitcoin Below $23,000, Is Recovery Expected?
03 August 2022 - 03:00AM
NEWSBTC
Bitcoin has seen another red daily close after a tremendous rally
from last week. This has now wiped off most of the gains made
during this time period and has left the digital asset struggling
below $23,000 once more. The momentum has quickly died down as the
news of the recession settled in. Its viability as an inflation
hedge is once more called into question given its performance so
far this year. Is Bitcoin Still A Good Bet? Bitcoin being an
inflation hedge, has been one of the selling points for the digital
asset. This is due to its performance on a year-over-year basis
compared to other financial markets over similar time frames. Since
these financial markets, such as the stock market, have been unable
to keep up with the high inflation rate, investors had naturally
flocked to bitcoin as yearly returns trumped the inflation
percentages. That is, until a bear market where bitcoin’s
performance as an inflation hedge starts to shake. An example is
the bear market that is currently being experienced in the market.
This decline has seen the digital asset lose about 44% of its value
during this time and inflation continues to hit 40-year highs. But
on a month-to-month basis, bitcoin has outperformed prominent
markets such as the S&P, giving credence to its ability to give
reasonable returns even during a bear market. BTC sees another red
daily close | Source: BTCUSD on TradingView.com Bitcoin has been up
more than 20% in the last month, while the S&P is up only 8%.
But on a yearly basis, the market is down significantly less than
bitcoin at 5.8%. So while bitcoin has shown to be a good bet when
it comes to hedging against inflation, it remains a choice for
investors with a large risk appetite. Market Sentiment Points To
Recovery The crypto market crash back in June had sent the market
sentiment deep into the extreme fear territory. This would persist
for a couple of weeks as the prices of cryptocurrencies struggled
to recover their lost value. However, it would quickly change when
bitcoin saw a swift recovery in its price back in July. Bitcoin had
made it back above $24,000 once more, and this had sparked faith in
the hearts of investors once more. Sentiment had recovered along
with the price and towards the end of the month had grown to a high
score just below 30 on the Fear & Greed Index. This score still
put it in the fear territory but was a remarkable recovery in
sentiment nonetheless. Now, even with the decline, data shows that
investors are still maintaining positive sentiment towards digital
assets such as bitcoin. One thing that positive sentiment drives
are accumulation, and accumulation leads to recovery. Bitcoin just
needs to hold above the $22,700 support and close with a higher
price for a bounce back above $23,000. Featured image from Outlook
India, chart from TradingView.com Follow Best Owie on Twitter for
market insights, updates, and the occasional funny tweet…
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