Cryptoverse: Big Investors Return to Bitcoin

Major investors dip their toes in crypto water Once again after a busy month for Bitcoin.

Digital asset investment products, often favored by institutional investors, saw inflows of more than $117 million last week, the largest weekly increase since last July, according to data from asset manager CoinShares.

Bitcoin was the biggest draw away, with tracking funds responsible for $116 million of that. The total assets under management of cryptocurrency funds rose to $28 billion, up 43% from the lows in November, as the collapse of the FTX exchange sent shockwaves through the industry.

A representation of the virtual currency Bitcoin is seen in front of a stock chart in this illustration taken on January 8, 2021. REUTERS / Dado Ruvic / File Photo (Reuters Photo)

“For the most part, people are more confident than they were a month ago,” said Joseph Edwards, investment advisor at Enigma Securities.

The most hated cryptocurrency in the world is Bitcoin

bitcoin, the original cryptocurrency, It rose nearly 40% in January, coming close to its best monthly performance since October 2021 and its second-best January performance in the past 10 years.

The rally, along with a brighter macro picture, has some investors hoping that the long cryptocurrency winter may finally be approaching in the spring. Many investors expect the US Federal Reserve to raise its record rates by 0.25% this week – the smallest rise since the tightening cycle began last year.

“If peak inflation is indeed behind us for now, long-term interest rates could drop as we approach the end of an inflation-focused rate hike cycle,” analysts at Fidelity Digital Assets wrote.

Miami Mayor Francis Suarez, center, and John Bartelman, President and CEO of TradeStation Group, head to the Miami Bowl, Wednesday, April 6, 2022, at the Miami Beach Convention Center in Miami Beach, Florida. The robot bull-like statue means t ((AP Photo/Wilfredo Lee))

“This may indicate positive momentum on the macro front for assets such as Bitcoin.”

Crypto liquidity provider B2C2 said activity in the options market indicated that traders were rushing to place their bets right after the Fed meeting, a sign of the importance the market places on it.

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Cryptocurrency trading volumes are also on the rise, according to CoinShares, with average weekly volumes up 11%, indicating traders are back after months of subdued activity.

However, cryptocurrencies haven’t been out of the woods for long, and the Federal Reserve could still spoil the party if it takes a more hawkish tone this week.

Cryptodata platform Coinglass’ Bitcoin Fear & Greed index — where 0 denotes extreme fear and 100 extreme greed — is hovering at 61, the highest level since mid-November 2021, after bitcoin began retreating from its peak.

“We may see a decline in the next week or two, and how deep that decline is is questionable,” Edwards said.

Bitcoin dominance

However, there are also other signs that the end of the bear market may be near, according to analysts at Bitfinex. They said that short-term investors were selling their bitcoins at a profit, while long-term “HODLers” were still holding on to their coins and not contributing to the selling pressure.

“Profits and losses realized for the entire market were recorded as positive in January 2023 for the first time since April 2022, and the continuation of this trend will indicate the final stages of a bear market,” they said.

In addition, bitcoin’s “dominance” or its share of the total cryptocurrency market could hover around 41% this month, levels not seen since last July. This simulates a similar jump in bitcoin dominance in April 2019, Citi analysts said, when bitcoin’s rally marked the bottom of the cryptocurrency market.

In this photo illustration, the stock trading chart for FTX Token (FTT) is shown on a smartphone screen.

BRAZIL – 06/20/2022: In this illustrated illustration, the stock trading chart of the symbol FTX (FTT) is shown on a smartphone screen. (Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images) The explosion of FTXs in November sent shock waves through (Rafael Henrique/SOPA Images/LightRocket via Getty Images/Getty Images)

other market watchers said Equities, another relatively risky asset class, It is likely to push bitcoin prices in the coming week, especially the performance of interest rate sensitive technology stocks.

Bitcoin’s correlation with Nasdaq was at 0.94, the highest level since May 2022, with Measure 1 indicating that the two are moving in a lock step.

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In late November, bitcoin broke ground with stocks and was trading at a negative correlation of 0.7.

“Bitcoin is likely to reach the next resistance level at $25,200 in the coming weeks,” said Rachel Lane, CEO of Exchange Synfutures. “Even if bitcoin ends up lower again, there is a good chance it will make a higher low on the larger time frame.”

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