Bitcoin price rebounds but remains sideways with low liquidity

By João Pedro Malar

Bitcoin operates at a high on Thursday, 18, with a recovery movement from the fall the day before.

Still, the asset continues with a strong sideways movement, reflecting both low liquidity in the market and uncertainties among investors about the global macroeconomic scenario, involving interest rate hikes and discussions about the debt ceiling in the United States.

According to data from the CoinGecko platform, the largest cryptocurrency on the market has traded up 2.1% in the last 24 hours, quoted at US$27,252.

The sector as a whole, meanwhile, has accumulated an appreciation of 1.5%.

Synthetix Network’s SNX and Optimism’s OP are among the bullish highlights, with Axie Infinity’s AXS leading the declines after the sharp rise the day before.

In recent weeks, bitcoin prices have alternated between US$26,000 and US$29,000, with difficulties in surpassing the US$30,000 barrier.

For Fernando Pereira, Bitget content manager, the scenario reflects an increasingly smaller asset supply effectively available for trading among investors.

“More than 15 million BTCs are in the hands of long-term investors, while BTCs in the hands of short-term investors are at 2023 lows.”

“This means that the supply for BTCs is getting smaller daily since long-term investors don’t usually sell their assets,” he explains.

He also points out that the situation is a “very optimistic sign” for the cryptocurrency since it represents a bet on future valuations.

Ayron Ferreira, chief analyst at Titanium Asset, points out that the sector has also been hampered by widespread uncertainty in the market.

“The predominant doubt centers on the Federal Reserve’s decision regarding the monetary tightening cycle.”

“The unknown is whether there will be continuity in this cycle or if a pause will occur,” comments the analyst.

“While some economic data has shown resilience in inflation, a factor that could justify the continuation of interest rate hikes, others indicate a gradual reduction in economic activity, signaling a possible need for monetary policy easing,” says Ferreira.

With the uncertainty, the tendency is for assets to lateralize until the scenario becomes clearer.

At the same time, a possible agreement in the United States to raise the debt ceiling may encourage the market, avoiding the negative effects of a default.

For Ferreira, “promising news” about the agreement helps Bitcoin and other cryptocurrencies rise, reflecting investors’ current mood.

HOW MUCH HAS BITCOIN RISEN IN 2023?

As of May 15, Bitcoin has accumulated a valuation of more than 60% in 2023 but is currently facing sideways, alternating between US$27,000 and US$29,000.

For experts, this appreciation is linked to the change in the market’s perspective on the cycle of interest rate hikes in the United States.

Investors are now projecting a softer stance by the Federal Reserve – reinforced after the recent bank failures – with lower hikes and possible cuts in the year’s second half.

The scenario favors riskier assets, such as cryptos, since it makes American fixed income less attractive and reduces fears about a possible recession in the world’s largest economy. In addition, other analysts point to more reasons that may be helping the crypto market.

Specifically, in the case of Bitcoin, experts believe that the banking system crisis strengthens the cryptocurrency thesis, which has emerged as a decentralized alternative in the financial system and is therefore attracting investors.

Others point to a possible change of vision in the market, with the idea that Bitcoin would be a “digital gold” gaining more supporters due to some of the cryptocurrency’s characteristics, particularly its finite and limited supply, which gives it a deflationary character.

*A reporter for Future of Money, he graduated in Journalism from ECA-USP, where he is currently a Master’s student in Communication. He joined EXAME in 2022 and covers topics linked to the digitalization of the economy, such as cryptocurrencies and means of payment.

With information from Exame

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