on the crypto
The price of bitcoin (quotation BTC) fell to $ 37.750, after hitting $ 40.700 the previous day. It is now trading at $ 38.800, showing a slight increase.
According to analyst Willy Woo, the price of bitcoin is currently only 10% affected by spot demand. Ninety percent of short-term prices are determined by futures traders, the dominant derivative of cryptocurrency according to Glassnode, as they swing between risk-on and risk-off. A financial concept that names assets that represent high or low risk.
Traders operate in a context of considerable economic and political uncertainty
This is due to global fears of a severe recession, rising inflation, a supply chain disruption driven by China's measures, and the constant threat of Russia's war in Ukraine.
This leads traders to avoid risky investments and seek safe haven assets to protect their money. This is framed by the rising prices of commodities, such as gold and oil, as well as the US dollar, and the bearish behavior of stocks and cryptocurrencies.
On the rise of the US dollar, Willy Woo said: "I read this as a harbinger of growing fears of a global market crash as investors rush to cash safety." In this context, he also sees bitcoin as a safe haven asset in the face of the crisis that could develop.
Traders see bitcoin as a safe haven in the face of a crisis, experts say
"The sheer strength of buying spot BTC in the face of macroeconomic risk sentiment suggests that investors already see it as a safe haven, even if the price does not yet reflect this," the analyst said. This is because the value of the cryptocurrency has managed to remain fairly stable over the course of the year with drops that have not been as severe, despite market fears.
The same was concluded by a Blockware Intelligence study reported by CryptoNews. Their report warns that some investors see bitcoin as a superior savings technology in the current macroeconomic environment of excessive inflation generating uncertainty and turbulence across the market.
In this vein, Willy Woo highlighted that demand for the cryptocurrency is approaching multi-year highs, as prices are falling sideways and becoming oversold. As such, he believes that the BTC price has reached a typical bottom region and is aiming higher.
However, he believes it will trade lower if the stock falls, due to the correlation they have maintained. A forecast in line with what was said by trader Eduardo Gavotti, who sees the market as a risk-off, that is, away from high-risk assets, which would generate sales of the cryptocurrency and its price drop.
“In the absence of risk appetite, there would be no new demand for bitcoin and in many cases there would be selling pressure. Especially in cases where it has been invested with leverage through futures contracts " - Eduardo Gavotti, bitcoin trader.
Conclusions
The market is difficult and uncertain to read at the moment, but the longer term seems clearer, Willy Woo said. “We are seeing the development of a supply shock structure, with a very strong buy that is not reflected in the price. This usually ends up in severe upward pressure on prices, ”he said.
In conclusion, he recalled that after six months of strong BTC accumulation until the beginning of 2021, its price went from $ 10.000 to $ 60.000. A situation that suggests it could happen again if the 2022 context motivates the strength of the high demand, according to him.
