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The price of Bitcoin has fallen more than 25% from its highest in November. Although it has started to improve today, as the price rises above 91,000, macroeconomic factors still play a major role.
The question is, is there a risk that Bitcoin will not be able to pass through 100,000 and fall below 80,000?
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Japan has slowed Bitcoin’s recovery
antiquity Bank of Japan Financial Markets He hinted that he could raise interest rates, which could threaten the carry trade in the Japanese yen, which has been a source of low-interest loans for decades.
Concerns about an economic slowdown and the Federal Reserve that has not cut interest rates, on the other hand, are also disturbing investors.
Bitcoin briefly fell below 85,000 before rising the next day, but the past few months have been full of rallies that subside after just a few days.
MicroStrategy may have to sell some of its bitcoins
MicroStrategy CEO Vaughn Lee recently stated that The company can sell Bitcoin If the stock trades below the value of its underlying holdings, that is a major drag that could push Bitcoin below 80,000.
The strategy is not just another player in Bitcoin. The company has been a Bitcoin treasure since 2020, and owns about 3% of all Bitcoin. Its stock has also performed poorly in recent months, making Lee’s scenario more likely.
The strategy has lost about 60% of its value since mid-July. Meanwhile, Bitcoin fell only 25% in the same period.
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The recent market action suggests that some cryptocurrency traders are trying to outperform a strategic company.
Market sentiment has changed
While a strategy that sells part of its Bitcoin could hurt confidence in the asset and lead to more sellers, the decline is not limited to Bitcoin, which has declined by 19% in the last 30 days.
Ethereum actually did worse Despite the lack of any connection to the strategy, it fell by 25% in the past month.
The coming weeks will be crucial for market sentiment. The Federal Reserve meets on December 9-10 to decide whether to cut interest rates again, while the Bank of Japan meets on December 18-19.
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Financial markets and cryptocurrencies could fall significantly if the Federal Reserve does not cut interest rates and the Bank of Japan raises its rate.
It is very likely that the price of Bitcoin will fall below $80,000 if these two situations occur. However, investors may see a strong rally if the Federal Reserve lowers interest rates and the Bank of Japan keeps its rate steady.
Higher interest rates can lead to more margin calls and ready institutions and over-leveraged investors to sell more assets.
The liquidation of financial trades that carry the Japanese Yen is perhaps the biggest factor that can affect the prices of Bitcoin and the financial markets in general.
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Bitcoin’s ability to cover inflation could push it to new highs
The sentiment does not look good for the price of Bitcoin at the moment, but its value as a digital asset remains intact.
As countries go deeper into debt and reduce the purchasing power of their fiat currencies, Bitcoin’s status as a decentralized currency could push it to all-time highs.
There are only 21 million Bitcoins, and no central authority can increase the supply of Bitcoin, giving it an investment thesis similar to gold. Bitcoin’s volatility makes it easy for investors to abandon ship, especially during market cycles like this one.
Nothing has changed the long-term value of Bitcoin, but the decisions of the central bank could push it below $80,000 in the short term.
Investors who prefer to stay in the market instead of timing the market may choose to buy the dip.
Financial institutions have begun to invest heavily in Bitcoin, and while the potential liquidation of the JPY carry trade could cause short-term disruptions, it will not impact Bitcoin’s long-term investment thesis.
