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Bitcoin Price: Fear Gauge Warns that BTC is Still in Trouble

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The fear and greed index suggests that Bitcoin is not out of the woods yet. The closely watched index hints that the current bounce in BTC and other cryptocurrencies could be temporary. Bitcoin price surged to $18,300 for the first time since November. It remains about 10% above the lowest level this year.

What is the Fear and greed index?

The fear and greed index is a sentiment tool that looks at several gauges in its study of the state of the market. The first known index was created by CNN Money and is one of the most popular tools in the market.

According to CNN, the index measures the state of the market by considering several gauges like market momentum, stock price strength, stock price breadth, put and call options, market volatility, safe haven demand, and junk bond demand.

Alternative.me developed a similar tool that focuses on the crypto market. It looks at market volatility, market momentum, social media, dominance, and trends. While these measures are important, I believe that they are not as exhaustive as those provided by CNN Money.

The fear and greed index ranges from 0 to 100. 0 means that investors are extremely fearful while 100 means that they are extremely greedy. In theory, investors should buy when it is in the fear level and vice versa.

Investors are still fearful

Bitcoin Price

The fear and greed index currently stands at 25, which is a sign that investors are still fearful. This means that long-term investors can start accumulating now. 

However, in most cases, buying when investors are fearful can be risky. Instead, I always recommend buying when it enters the greed level. In such a situation, it usually means that there is momentum going on.

Investors are fearful because of the rising fear of contagion in the crypto industry following the collapse of FTX. The US has arrested and charged Sam Bankman-Fried with numerous crimes, including money laundering and conspiracy. 

The next key catalyst for Bitcoin price will be the upcoming interest rate decision by the Federal Reserve scheduled for Wednesday. Economists expect that the bank will hike interest rates by 0.50% in its final meeting of the year. A hawkish statement will be bearish for Bitcoin prices.

Bitcoin

Bitcoin Price Could Get Extremely Ugly – Barrons

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Bitcoin (BTC/USD) price recent rebound has faded and its easy to see why. After soaring to a two-month high of $21,470, Bitcoin has pared back some of those gains to trade at $20,895. This decline is mostly because of the fundamentals and technicals of the coin as I will explain below.

Bitcoin Fundamentals

The main fundamental reason why Bitcoin is pulling back is the rising fears of a recession. A recent survey by WSJ placed the risk of a recession in the US at 61%. That is notable since it is the highest the figure has been in months. 

At the same time, Wall Street banks like Goldman Sachs, Citigroup, and Wells Fargo published weak financial results. Most of them said that their profits tumbled by more than 30% in the final quarter of 2022. Reading between the lines shows that most of them have allocated millions of dollars in credit loss provisons.

Historically, these provisions tend to rise when there is a fear of a recession. At the same time, many safe American companies have starte announcing substantial layoffs recently. Amazon is laying off 18,000 people while Microsoft, Salesforce, Meta Platforms are laying off thousands of workers. In a note, an analyst at Oanda said:

“Bitcoin prices are weakening as growth fears have Wall Street worried a…

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Bitcoin

2 Reasons Why Bitcoin Price is Soaring in 2023

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Bitcoin price has staged a strong comeback in 2023 as investors rushed to buy the dip. The BTC/USD exchange rate surged to a high of 21,465, the highest level since November. It has risen by more than 30% from the lowest point in 2022. Here are the top reasons why BTC price is soaring.

Mild recession hopes

Bitcoin and other financial assets like stocks and gold have rallied because of the falling inflation in the United States and around the world. Consumer inflation dropped from 7.1% in November to 6.5% in December. Core inflation dropped to 5.7%. 

And on Wednesday, data from the US showed that wholesale prices dropped by 0.5% in December, higher than the expected 0.1%. The producer price index (PPI), rose by 6.2%, the lowest level since March 2021. This decline happened because of the falling energy prices.

Another data showed that retail sales tumbled in December. They dropped by 1.1% in December, the biggest decline in 2022. In a note, an analyst at RSM said:

“The lag impact of elevated inflation weighs heavily on U.S. households, it’s very clear that the median American consumer is still reeling from the loss of wages in inflation-adjusted terms.”

A recession is often seen as a bad thing. But in the financial assets, it can be seen as…

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Bitcoin Price is Getting Severely Overbought: Is it a Buy?

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Bitcoin price made a spectacular comeback in the past few days as investors reflect on encouraging data from the United States. The BTC/USD exchange rate surged to a high of $21,365, the highest point since November. It has risen by more than 35% from the lowest level in November. So, is the tide turning?

Will the Fed pivot?

Bitcoin and other global assets continued surging as investors reacted to the latest American economic data. Data published last week revealed that the American consumer inflation inched downward in December. It dropped to 6.5% in December, the sixth straight month of decline.

A week earlier, data by the Bureau of Labor Statistics (BLS) showed that the country’s unemployment rate dropped to 3.5% in December. In the same period, wage growth increased by 4.7%, lower than the previous month’s 5.2%. A decline in wage inflation is a positive sign for Bitcoin and other financial assets because of the Federal Reserve.

The Federal Reserve has been in a strong tightening phase in the past few months as it continues its battle against inflation. Its goal is to soften the economy and prevent a hard landing. Such a situation will happen when wage growth eases. 

Therefore, Bitcoin has risen because of the rising chances that the Fed will start to pivot. Historically, Bitcoin and other…

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