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According to Khac Hieu
Investing.com – The cryptocurrency market is entering the final weeks of 2023 in a state of constant volatility compared to the beginning of the year. Analysts say that in 2024, the concern of cryptocurrency investors will be the interest rate moves of central banks and whether US authorities will license the opening of exchange-traded funds (ETFs). ) spot delivery or not.
Bitcoin is affected by many factors
According to analysts, Bitcoin’s price decline shows that deleveraging has occurred under overbought conditions. Notably, the cryptocurrency’s daily relative strength index (RSI) has been above the 70 mark since December 5, suggesting it is overvalued. Most Bitcoin investments are currently sitting on unrealized gains, raising the possibility of profit taking at current market peaks.
Besides, monitoring the reserves of Bitcoin miners also reinforces the profit-taking scenario that takes place. Wallet data tracked by crypto firm CryptoQuant analysis shows that Bitcoin’s decline on December 11 followed a significant drop in miners’ holdings of the cryptocurrency. That coincided with increased miners’ Bitcoin inflows to cryptocurrency exchanges, suggesting they intend to sell or have already sold.
It seems that miners are looking to secure profits due to the upcoming 2024 halving event. With competition indicated by the increasing rate of Bitcoin pumping into the market, miners are likely to adopt strategies aimed at increasing their cash holdings.
Cryptocurrency market hopes for FED?
Cryptocurrency markets are being buoyed by expectations that decelerating inflation will allow major central banks, especially the US Federal Reserve (FED), to begin lowering interest rates in 2024. Falling interest rates will make riskier assets like virtual currencies more attractive.
Additionally, the market is also placing There are great expectations for the US Securities and Exchange Commission (SEC) to approve the opening of a bitcoin spot ETF. Such funds are expected to help attract a large amount of capital to flow into the cryptocurrency market, especially from institutional investors.
Although the financial market is expecting the FED to reduce interest rates in the first half of 2024, US officials have signaled that they will not reduce interest rates soon. US employment and inflation data released in recent days show that expectations of interest rate cuts early next year may be too early. Economic experts also believe that the FED will have to wait until the second half of 2024 to reduce interest rates.
Leverage price increase
Cryptocurrency executives say Bitcoin’s breach of the $40,000 mark, its highest level in nearly a year and a half, is the start of a new bull run with growing expectations that the cryptocurrency world’s largest hit a new all-time high for Bitcoin in 2024, to above $100,000.
This year, Bitcoin has made a surprising recovery despite falling cryptocurrency prices, low transaction values, and difficult economic conditions. The cryptocurrency has increased by 164% since January 1 and is currently trading above $40,000. This increase even surpasses the value of traditional assets such as gold (up about 10%) or the S&P500 stock index (up 20%).
According to statistics from data aggregator CoinGecko, Bitcoin has also increased its proportion in the entire cryptocurrency market from 38% to over 50%. The overall cryptocurrency market capitalization has increased from $871 billion at the end of last year to $1,700 billion this year.
Besides, The price increase scenario in 2024 is also being hotly discussed when Bitcoin halving, an event that cuts miners’ rewards by 50% and takes place every four years, is expected to occur in May 2024. This helps limit Bitcoin supply and is often the trigger for a new price increase.
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