Although rising US inflation and excessive fears of Evergrande contagion may have contributed to Bitcoin’s recent dip, many analysts see it as a “necessary retest.”
In the crypto market, volatility reigns supreme, and the November 11 sell-off during the evening in the Bitcoin price serves as a warning that a new all-time high is frequently followed by violent whipsaws back to fundamental support levels.
Following a near low of $62,800 during the late hours on November 10, information from various platforms reveals that the Bitcoin price has clawed its way up to the $65,000 level, where bulls are consolidating and regrouping for yet another higher reach.
Bitcoin reached its all-time high shortly after the October Consumer Price Index (CPI) report revealed a higher-than-expected inflation in the United States. According to the data, the CPI grew 6.2 percent in October compared to the previous year, the quickest rate in three decades.
As fears about increasing inflation grab the news headlines in the United States, here’s a peek at what analysts have to say about the future for Bitcoin and the crypto industry.
The Bitcoin Price Dips Are ‘Transitory’
The sudden $7,000 drop in Bitcoin may have surprised some, but according to pseudonymous Twitter user and analyst ‘Nunya Bizniz,’ the price movement over the previous few days is normal and temporary based on Bitcoin’s past behavior.
An increase in the price of Bitcoin is frequently countered by a retreat that reaches or temporarily dives under the 20-day moving average before moving higher yet again.
Inflation and Evergrande Influence the Crypto Market
Jean-Marc Bonnefos,Tellurian ExoAlpha’s head of asset management, offered insights into the macro dynamics at play, stating that “there has been much talk about the impact of the Evergrande story on the recent sell-off in the market.”
Bonnefos explained that “Evergrande news is to equities what Elon Musk tweets are to cryptos,” meaning it is slightly orchestrated news to impact markets.
Furthermore, Bonnefos believes that the cryptocurrency markets appear to be ‘overreacting’ to the reports. He also believes that the latest downturn is perhaps due to a more technical adjustment after the rapid gain of the past few days.
Additionally, it’s not just bad news regarding Evergrande and influencer tweets that are impacting the cryptocurrency market’s price behavior. The previous 6.2 percent increase in the US Consumer Price Index (CPI) also alludes to a crucial element affecting global financial markets and the Bitcoin price, according to Bonnefos.
Bitcoin Is Going Through a Much-needed Retest
Twitter analyst user ‘GalaxyBTC’ offered one last ray of hope, posting a chart that depicts one potential path for the price of Bitcoin to hit $75,000 in the near future.
The Relationship Between Bitcoin and the Stock Market
Over a seven-day period, the charts displayed the closing prices of the major US stock indices, as well as Bitcoin and Ether, the second-largest cryptocurrency by market capitalization. The charts depicted the unfavorable response to the inflation announcement, which was ultimately gloomy by the end of the day.
The 90-day association between Bitcoin and the S&P 500 has climbed from about zero in June – showing no genuine relationship – to roughly 0.3 percent presently, indicating a modestly positive price relationship.
Following the price dip late Wednesday, Laurent Kssis, director of CEC Capital, mentioned that he is noticing a lot of demand for Bitcoin.
The reasons for the decrease, according to Kssis, are unknown, although it was worsened by the liquidation of lengthy trading positions.
What About Ethereum?
Ethereum also set a new all-time high of $4,851 on Wednesday.
Thus far this month, Ether has gained 35%.
Daniel Kukan believes that Ether is going to outperform Bitcoin before the end of the year. He is a senior cryptocurrency trader at Crypto Finance AG, which is Swiss-based. This poses the question: Are there better cryptos to buy other than Bitcoin?
Other smart-contract tokens performing well include Solana’s SOL token, which is currently trading at $241, just below its all-time high set on Nov. 6.
The ADA of Cardano has dropped four percent in the previous 24 hours, while the DOT of Polkadot has down 2.5 percent.
Final Words
The total cryptocurrency market capitalization is currently $2.847 trillion, with Bitcoin commanding 43.1 percent of the market.
WeInvests is a financial portal-based research agency. We do our utmost best to offer reliable and unbiased information about crypto, finance, trading and stocks. However, we do not offer financial advice and users should always carry out their own research.
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