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Bitcoin continues to underperform as a general “risk-off” sentiment has investors driving toward gold as a safe haven asset. Not Risking It Concerns about the Russo-Ukrainian war continue. The U.S. inflation struggles at a four-decade high and Fed rate hike fears prevail. The uncertainty extends to the world economy as a recession is expected instead of a recovery. The IMF’s managing director Kristalina Georgieva called it “a crisis on top of a crisis.” “The war is a supply shock that reduces economic output and raises prices. Indeed, we forecast inflation will accelerate to 5.5 percent in advanced economies and to 9.3 percent in emerging European economies excluding Russia, Turkey, and Ukraine. ” The IMF stated last week. Reuters recently quoted Commerzbank analyst Daniel Briesemann, who talked in a note about the factors that have “lent buoyancy to gold in recent days,” mentioning the “strong buying interest on the part of ETF (Exchange Traded Fund) investors” and news about the Ukraine war. “Russia appears to be preparing to launch a major offensive in the east of the country – that is generating considerable demand for gold as a safe haven,” the analyst said. This summarizes the “risk-off” sentiment at the moment. As expected, equities suffer as investors are selling risky assets and purchasing the ones negatively correlated to the traditional market. Thus, the crypto space is struggling alongside de stocks market and gold is rising. Bitcoin Outperformed By Gold Data from Arcane Research’s latest weekly report notes that it has been a gloomy year for the “digital gold.” In the first three weeks of 2022, Bitcoin sank 25% and it is still down by 18% in the year despite its slight recovery. Similarly, Nasdaq records a 19% decline in the year, having underperformed against bitcoin “by a small margin,” notes the report, adding that “This is surprising given that bitcoin has tended to follow Nasdaq, albeit with higher volatility.” The general fear over geopolitical and macroeconomic uncertainty has given gold the safe-haven asset spotlight once more. The asset outperformed all the other indexes seen below with a 4% gain. Meanwhile, the currency market is performing with “the same risk-off patterns.” The Dollar has been proving its “risk-off” dominance as the US Dollar Index (DXY) is up 7%. The Chinese yuan has taken a hit over concerns about the country’s “zero-covid” policy –which creates issues for the global supply chain– and the slowing down Chinese economy. In contrast, investors have been running to the US Dollar for safety. Bitcoin supporters usually refer to the coin as “digital gold” alleging it is a safe haven asset, and this narrative had held well while BTC had been “uncorrelated with most other major asset classes,” but the tide is shifting with the 2022 scenario as investors are rather placing the coin “into the risk-on basket”. A previous Arcane Research report indicated that bitcoin’s 30 -day correlation with the Nasdaq is revisiting July 2020 highs while its correlation with gold has reached all-time lows. A pseudonym traded noted that “As Bitcoin adoption goes on and more institutional investors enter the market, the correlation of BTC and stocks becomes more and more tight. That is a paradigm that the crypto world struggled to come to terms with in the past but is now more real than ever. A healthy stock market is good for Bitcoin.” Meanwhile, the general sentiment of traders seems to be bearish, with many saying that the coin could visit the $30k level soon.
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Notifi Network has integrated with the Solana Realms DAO platform to help increase governance participation rates by expanding notification services.
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As the inaugural conference presented by FTX and SALT in underway in the Bahamas, Cointelegraph gathered some key insights.
In late March/early April, the bitcoin futures basis had mounted an impressive recovery that pushed sentiment back into the positive. This had come after months of a declining futures basis, so this recovery was a welcome development in the market. This would prove to be short-lived, however, as the futures basis had taken a sharp nosedive in mid-April. Now, it is falling towards one-year lows, leaving in its wake a trail of wary investors. Nearing One-Year Lows Bitcoin’s drop back into the $30,000 has had a profound impact on the futures basis. As investor sentiment had turned largely negative, the basis had lost the majority of the gains it had made at the end of March. The decline did not stop there though as the basis has now broken towards one-year lows. Related Reading | Bitcoin 401k? Fidelity Investments Says Yes In the past year, there have been a total of two times where the basis had touched this low. The first had been on July 20th, 2021, which had been promptly followed by the famous summer short squeeze. It had come after major liquidations had pushed retail traders to try to recover losses by shorting the market. The futures basis had fallen this low again on February 18th this year. The last time though, it had recovered before reaching the July 20th low, culminating in its recent peak in April. Unlike the July 20th low, a consolidation in the price of bitcoin had followed the February low. Therefore, not giving a clear, consistent picture of what to expect when the futures basis drops this low. It is however far less volatile now than it was last summer. BTC futures basis close to one-year lows | Source: Arcane Research The average futures basis now sits at a low of 2.12%, after touching as low as 2.02% on Sunday, in the offshores futures market. This takes into account all of the crypto futures exchanges except the CME. This time around, the decline in the futures basis is also characterized by liquidations, although nothing as significant as those experienced in July. How Bitcoin Price Is Reacting Bitcoin has been on a slow but steady recovery trend since falling to the $37,000 level. It is not unheard of that the digital asset quickly lose footing above $40,000 but a recovery with current market conditions is an impressive feat for bitcoin. Going by previous occurrences of futures basis declining, a recovery from this point could be very good for bitcoin. The short-squeeze that had followed the July decline had effectively pushed the cryptocurrency towards a massive bull trend, ending in a new all-time high above $64,000 in November. BTC holding against the bears | Source: BTCUSD on TradingView.com A recovery had also marked the decline in February, albeit to a lesser extent. With the current trend of stagnating momentum, the futures basis may decline further for another week before a recovery towards a bull trend could be in the works. Related Reading | Bitcoin Beneath Key Support Level; What’s Next? Bitcoin is trading at $39,002 at the time of this writing. Bulls continue to mount strong opposition causing the $36,000 to $38,000 support level to strengthen. Featured image from Bitcoinist, charts from Arcane Research and TradingView.com
Senator and outspoken crypto proponent Indira Kempis shared her excitement at the development on Twitter, stating that “for freedom, inclusion and financial education in Mexico.”
A survey by crypto trading platform Bitstamp shows that 80% of institutional investors believe crypto will overtake traditional investment vehicles. Furthermore, 70% of institutional investors said crypto was a trustworthy investment, with 68% actively recommending this asset class in investment strategies. Institutional Investors Bullish About Crypto Bitstamp, a major crypto derivatives trading platform, announced the […]
