©Reuters
Investing.com – Cryptocurrencies traded mixed on Tuesday, following tension this week ahead of central bank meetings. The drops below $42,000 and remains at $2,200.
Manuel Villegas, digital assets analyst at Julius Baer (SIX:), analyzes the main events in the United States in relation to the digital asset market and, in particular, the world’s largest cryptocurrency. “The year-to-date rally remains steady, with the asset outperforming most of the market, particularly on a risk-adjusted basis. Despite the series of upside implosions that characterized 2022 and widespread scrutiny As a result, bitcoin remained resilient through an eventful 2023.”
“A confluence of positive fundamentals has created the ideal conditions for the asset to rally, including US exchange-traded funds (“ETF saga”), long-term holder accumulation, pre-halving speculation l “next year and the growing conviction that America’s fastest and steepest monetary tightening cycle has come to an end,” Villegas added.
“Cryptocurrency investors tend to favor the larger digital asset when global liquidity conditions deteriorate, as evidenced by changes in bitcoin’s dominance relative to cryptoasset market share. However “The behavior of cryptoassets has been more in line with that of risk assets. Growing expectations of a rapid reversal of US monetary policy have had as fundamental an influence on US stock markets as they have on bitcoin,” warns l ‘expert.
“Positive dynamics in net liquidity in the United States tend to be accompanied by improving sentiment towards cryptocurrency markets. There is no doubt that rising interest rates have affected crypto -assets, because the technological development of cryptocurrencies has relied heavily on capital from private investors,” underlines Mr. Villegas. “There is also no doubt that the attractive returns offered by lower-risk assets have increased opportunity costs toward riskier alternatives, as evidenced by the adoption of U.S. Treasuries and the nearly $6 trillion dollars currently held in US money market funds,” he adds.
“Lately, market positioning in favor of a more dovish US Federal Reserve in 2024 has triggered all sorts of speculation in risk assets. In our view, following the recent shift in market expectations towards a rapid reversal of policy US monetary policy, it seems unlikely that there will be any major surprises. Although we believe that US interest rates have peaked, we believe that the market has ignored a lot of good news lately, which suggests that prices may enter a consolidation phase before attention shifts back to the imminent launch of the ETF,” Villegas concludes.
Your attention please ! The InvestingPro platform, which offers AI-driven investment strategies, trading ideas from top investors and massive fundamental data, is 60% off! But that’s not all, since we’re adding a layer for readers of our articles, who benefit from an additional 10% reduction on the 2-year Pro+ subscription using the promo code “ACTUPRO” HERE. Don’t wait any longer, and take your investments to the next level with our BEST OFFER OF THE YEAR!