Even after a major correction, which followed weeks of near-total inactivity, and a new focus on real interest rates, bitcoin’s most patient investors are still holding on to their coins. The cryptocurrency closed at $25,972.52 on Friday and has lost 0.25% this week — its eight negative week in the past nine, according to Coin Metrics. Last week there was a drop of 11%. Coin Metrics measures a week in crypto, which is traded 24 hours a day, from the close of the stock market at 4pm ET on one Friday to the next. Bitcoin had been almost completely inactive for the past few weeks leading up to the violent sell-off on August 17, and many investors expected that one of the many tailwinds beating the market would eventually push the price higher. Instead, inflation updates and the possibility of more rate hikes have added more uncertainty to crypto. “There is uncertainty ahead, and the Fed will act if the inflation numbers warrant it,” Oppenheimer’s Owen Lau said after Fed Chairman Jerome Powell’s speech Friday in Jackson Hole, Wyoming. “The part that could disrupt the crypto market is if interest rates stay higher longer, disappointing expectations that interest rates could be cut in the first half of 2024. Until the Fed sees sustained progress, it’s not just inflation that will reach 2%. It looks like the Fed will remain restrictive.” Nevertheless, the market appeared relatively calm. The August plunge was the biggest one-day sell-off since the height of the FTX fallout in November. An Indicia Labs analysis of the talk on social media on crypto shows, however, that sentiment only entered neutral territory seven full days after the price plunge, which pales in comparison to the drop that occurred in November, when sentiment fell from positive to neutral in the days leading up to the crash. and fell into “very negative” territory four days later.”There hasn’t really been a big change in the fundamentals,” said Gustavo Schwenkler, an associate professor at Santa Clara University’s Leavey School of Business and cofounder of Indicia Labs. “What’s really happening right now is people are just waiting it out. We don’t know what’s going to happen with the SEC or if there might be new policies. It is unclear where crypto is headed in the US.” regulatory perspective. On top of regulation, JPMorgan said on Thursday that the bitcoin correction “can be partly attributed to the broader correction in risky assets such as stocks and technology in particular, which in turn appears to have been driven by frothy positioning in technology, higher US real values .” returns and growth concerns about China, but that the country sees limited short-term downsides for the crypto markets. Trading data also shows that long-term investors are not easily shocked by the recent weakness. Investors who have held their bitcoin for a year or more now make up nearly 70% of bitcoin holders, according to Glassnode. The newest group of long-term holders — specifically those who have owned their bitcoin for one to two years — has fallen since the start of the year (36%), but the number of people who made a purchase two to three years ago has fallen. grown (85.8%). “The number and percentage of bitcoins held for more than a year is hovering near all-time highs. This tells us that despite price volatility and the recent drop in prices, long-term holders are steadfast. This fact, combined with the April reward halving, could be the springboard for higher prices in the future,” Greg Cipolaro, global head of research at NYDIG, the crypto subsidiary of Stone Ridge Asset Management, told CNBC. He added that while it’s unclear what exactly accounts for traders’ resilience, mature crypto investors are increasingly “aware of the cycles associated with Bitcoin’s halving and expect it to repeat itself, leading to price increases.” to lead.” —Michael Bloom and Nick Wells of CNBC contributed to the coverage.
