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Bitcoin has fallen in value in the last three months. The stock market has also experienced negative numbers, and bitcoin has historically been closely correlated with movements in the US stock market and tends to follow them either higher or lower, writes CNBC.
From around $ 47,500 on March 29 to now at around $ 20,000. Technical strategist at Fundstrat Mark Newton writes, according to Bloombergthat bitcoin has room to fall as low as $ 12,500 before it reaches its bottom.
On Wednesday, the crypto market is also characterized by the fact that a court in the British Virgin Islands has ordered the crypto hedge fund Three Arrows Capital liquidated, after the company has defaulted on debt, writes among others WSJ. According to the major newspaper, the fund had around three billion dollars under management in April – before the crypto market really started to plunge.
– Changed drastically
Investment director Robert Næss in Nordea does not think bitcoin has any future, but says that even if it is believed that the value of bitcoin will be zero in a few years, the value may well rise to high levels again before that time.
– What distinguishes the recent fall from previous years’ fall is that before there was much more development in the crypto world. This year we have experienced that several business models in the crypto market simply do not work.
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He highlights Celsius and Terra as failed models.
– A disadvantage for the players in crypto is that most of the information is available online. Then we may have situations like in Terra where everyone can see that they are not able to lend the money for which they pay a high interest rate and it will not be able to last any longer. Or as in Celsius, you can see that the deposits can be taken out on the day and then they have at the same time placed these in instruments that are tied for a long time. This can lead to customers becoming anxious and escaping, or that hedge funds or others take advantage of the situation to make money by shorting their instruments, says Næss.
Since mid-June, Bitcoin has struggled to stay above $ 22,000. At the same time, the Norwegian crypto exchange Firi announced redundancies.
– Market conditions have changed drastically recently. Investors are paying more attention to profitable growth than just a few months ago, and then we will have to adapt to this. Although the cost cuts have been well received in the capital market, today we think first and foremost of the employees who have to leave the company, said CEO and founder of Firi Thuc Hoang to DN and.
Macroeconomic backdrop
Like several growth and technology stocks in the traditional financial market, the crypto market has also experienced a clear shift in recent months.
High inflation and higher interest rates are just some of the things that have caused the market to shy away from “risky” investments, such as cryptocurrencies exposed to fluctuations, or for example some of the high-flying tech and growth stocks that were very popular during the pandemic.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases using a link, which leads directly to our pages. Copying or other use of all or part of the content may only take place with written permission or as permitted by law. For additional terms se her.