Buying-the-dip has supported Bitcoin

Market picture

The crypto market is waking up from a complete lull. Down just over 1% yesterday in the $16.5K area, bitcoin hit lows since late November, triggering a wave of stop orders during the early Asian session that dragged the price to $16.25K at one point. This was followed by a buying spree, gradually bringing the price to $16.8K.

The relatively small moves so far have not changed the centre of gravity by historical standards, leaving the first cryptocurrency to range narrowly for the past month and a half.

During the bull market in cryptocurrencies, a lack of growth was often seen as a precursor to declines. Now, interest in buying on declines may signal interest from long-term buyers. Of course, this is only true for the current fundamental picture.

According to CoinShares, investments in crypto funds fell by $30M last week, with outflows the highest in 14 weeks. Bitcoin investments decreased by $18M, and Ethereum by $9M. Investments in funds that allow shorts on bitcoin increased by $1M. Trading volumes rose to $866M, up from $678M the previous week.

News background

Real Vision founder Raoul Pal expects to see the market bottom by March 2023, after which a slow recovery will begin. He attributes this to the end of the Fed's rate hike cycle. According to Pal, bitcoin is the least attractive of the major assets, as it is more stable. Ethereum has more upside potential.

SEC chief Gary Gensler said that the cryptocurrency market might operate under the rules that apply to the securities market. However, he stressed that crypto assets are too volatile and speculative, putting investors at significant risk.

According to CoinGecko, over the past year, 3,300 cryptocurrencies (about 40%) out of more than 8,000 at the beginning of the year - have left the market. According to the portal's rules, a cryptocurrency can be removed from the site due to a lack of activity for two months or if it is confirmed that the project is fraudulent. More than 117,000 fraudulent tokens have appeared on the market since the beginning of 2022, Solidus Labs estimated.

Nigeria intends to recognise cryptocurrency as an investment asset. A new investment and securities bill has passed its second hearing in the country's parliament.

By the FxPro Analyst Team