7 important factors currently affecting the BTC price

There are currently two views of the Bitcoin course. The first would be that Bitcoin is doing relatively well despite its correction and the Bitcoin price should actually be looking much worse. After all, we are in a period of great macroeconomic uncertainty and rapidly increasing interest rates.

Convinced Bitcoin supporters, on the other hand, are likely to see this the other way around and argue that Bitcoin would have to outperform other investments much more precisely due to the uncertainty and increasing inflation – the reason for the rising key interest rates.

So far, at least, the latter group still seems to represent the minority. If the majority of market participants shared a similar view, the Bitcoin course would not be in a state of lethargy.

How the Bitcoin price will continue in the coming months depends above all on which narrative prevails among investors. In order to be able to better classify which traction forces are currently affecting the Bitcoin price and are responsible, among other things, for shaping the views described above, seven important factors are listed below that will decide how the Bitcoin price will continue in the coming months .

1) Google: Bitcoin searches are depressing

Bitcoin searches, or people’s interest in the cryptocurrency, are at their lowest since December 2020. Searches are down 79 percent from the May 2021 peak. Overlooking the Google chart no trend reversal can be discerned. The low interest is a major stress factor for the Bitcoin course. This in turn suggests that few new investors are entering the crypto sector. Things aren’t looking any better for other cryptocurrencies like Ethereum either.

2) Hashrate and nodes remain unimpressed

the Hashrate, i.e. the overall computing power of the Bitcoin network, seems to be completely unimpressed by the difficult market environment. It only knows one direction: north. Also the number of bitcoin nodes that nodesremains stable and even tends to increase slightly.

It is impressive that these technical fundamentals are so robust and defy all negative influences. A circumstance that is very positive for the future viability of the Bitcoin network and thus of the course.

3) More consumption, less investment: No money for Bitcoin

The loss of purchasing power caused by inflation is now so great that it influences the investment decisions of many people. Lower and middle incomes in particular are forced to reduce their savings and investment rates in favor of the consumption rate, i.e. supermarket shopping and filling up the tank. The first to suffer are optional risk assets. This means: While pension plans or bank installments for your own property continue, liquid assets with a higher risk profile are reduced first.

Tech stocks and cryptocurrencies like Bitcoin are suffering. Especially since rising key interest rates as a reaction to inflation mean that assets without cash flow generally perform worse than dividend stocks, for example. If the increasing impoverishment of society continues, this is a serious stress factor for the BTC course.

4) Macro situation: The difficult search for the glimmer of hope

In addition to the high inflation, the overall political and macroeconomic situation is also putting pressure on the financial market and thus also on Bitcoin. The delivery bottlenecks caused by the corona lockdown in China and the uncertainty caused by the Ukraine war, especially with regard to the supply of energy and raw materials, are weighing on risky assets such as Bitcoin. Especially since these factors are also drivers of inflation.

So far there has been a lack of timely glimmers of hope on a global economic policy level. The systemic risks are still considered to be high and are therefore a rejection of Bitcoin for the majority of investors.

5) Loss of confidence caused by inflation provides breeding ground for alternatives

The fact that you can buy less and less for one euro or one US dollar should in turn increase the public’s openness to alternatives. Inflation has now become a regular topic. New fears arise in the population. These in turn can serve as a catalyst for gold, but also for Bitcoin. Even cautious, conservative investors are finding it increasingly difficult to remain calm in the face of high inflation. This forced activism can be channeled into freed up funds for Bitcoin. So far, at any rate, this effect has not really had an impact. The current impression goes more in the direction of sitting out and doing nothing.

6) Prohibition fears are in trend reversal

One of the biggest stumbling blocks for Bitcoin in recent months has been the regulatory debate. In the EU in particular, this had taken on absurd proportions. At times it was even about a bitcoin ban for European service providers. In the meantime, however, it is clear that there will be no such massive restrictions either in the EU or in the USA. Instead, the requirements for crypto service providers will continue to increase and privacy will be significantly reduced. Certainly a development that can be viewed critically in parts, but not a bad sign for the Bitcoin course.

The new regulatory security offers banks, asset managers and other financial service providers the opportunity to invest in the crypto sector. The burdensome regulation debate should have found its bottom, so that positive effects can be expected in the coming months.

7) Wall Street wants bitcoin

Where the prices of asset classes move is mainly decided by the big players on Wall Street. The relevant institutes are signaling more and more clearly that crypto is part of their long-term strategy. It takes a long time for them to set in motion, but once the processes have started, they are difficult to stop. A concrete example would be the acceptance of Bitcoin-secured loans at the investment bank Goldman Sachs. Another example is the willingness of the world’s third-largest wealth manager, Fidelity, to open its pension fund to Bitcoin. Americans who want to fund their company-sponsored pension plans with Bitcoin in the future now have the opportunity to do so. This is exactly where they all sit big lever. Effects of this kind could only lead to significant cash inflows in the next few months. Smaller, more regional institutes such as Commerzbank or N26 are also providing important Bitcoin support with their latest crypto-friendly announcements.

Correspondingly, the chances of a spot Bitcoin ETF decrease continuously to. So far, there are only Bitcoin ETFs based on futures in the USA. However, these are more like an unnecessarily complicated makeshift construction that can only be recommended with great restrictions. If not ETFs, the selection of highly regulated ETPs or ETNs is increasing significantly, especially in Europe. Providers such as 21shares, VanEck, Vontobel, ETC Group, etc. are providing more and more cost-effective Bitcoin securitisations and making sure that even “token grouches” can keep Bitcoin in their securities portfolio.

Conclusion

With the exception of the Terra Luna tremor, it is currently primarily external factors that are putting significant pressure on Bitcoin. Should mean: Within the crypto and bitcoin ecosystem, there are only a few reasons that explain the poor performance. Instead, topics such as interest rate hikes, the consequences of inflation and political uncertainty dominate the investment behavior of (potential) Bitcoin investors.

Especially the consequences of stagflation or even recession, which represent a realistic scenario in view of the difficult environment, can overshadow the actually positive indicators. Bitcoin has to wait for the time being, a timely and above all sustainable countermovement is at least not foreseeable. Nevertheless, the chances of greater decoupling also increase over time. This applies less to altcoins than to bitcoin.

Should the original bitcoin narrative gain popularity among investors as a fiat alternative and apolitical store of value with built-in inflation protection, then sentiment may turn in favor of bitcoin. When and if this trend reversal will happen, however, can hardly be predicted. Of course, this statement, like the entire analysis, does not include any technical chart assessment. These remain unconsidered.

Disclaimer: The statements in the article only reflect the personal opinion of the author and do not represent a recommendation to buy or sell.

You want to buy Bitcoin (BTC)?

We show you the best providers where you can buy and sell Bitcoin in just a few minutes.

To the guide


source site-52