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Even after a major correction, which was followed by several weeks of near-complete inactivity, and a renewed focus on real rates, bitcoin’s most patient investors are still holding onto their coins. According to Coin Metrics, the cryptocurrency closed Friday at $25,972.52, down 0.25% for the week — making it eight negative weeks in the past nine. It had registered a decline of 11% last week. Coin Metrics measures a week in crypto as the 24 trading hours from the stock market close on one Friday at 4:00 PM ET to the next Friday. Bitcoin remained almost completely inactive for several weeks, leading to its violent selloff on August 17 and many investors hoping that any of the many adverse conditions the market was monitoring would eventually push its price up. Instead, inflation updates and the prospect of more rate hikes have brought more uncertainty to crypto. “There is uncertainty ahead, and the Fed will take action if inflation data warrants it,” Oppenheimer’s Owen Lau said Friday after Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole, Wyoming. “The part that could trouble the crypto market is that interest rates remain high for a long period of time, which dampens hopes that a rate cut could happen in the first half of 2024. Unless the Fed makes continued progress Until then, not only does inflation reach 2%, it appears that the Fed will continue with its accommodative stance.” Nevertheless, the market has appeared relatively calm. The August decline was the largest one-day selloff since the peak of the FTX decline in November. However, Indica Labs’ analysis of social media chats about crypto shows that sentiment only fell into neutral territory after a full seven days of price declines. The decline is smaller than that seen in November, when sentiment fell from positive to neutral in the days before the crash, and into “very negative” territory four days later. “There really hasn’t been a big change in the fundamentals,” said Gustavo Schwenkler, associate professor at Santa Clara University’s Leavey School of Business and co-founder of Indiasia Labs. “What’s really happening right now is people are just waiting for it. We don’t know what’s going to happen with the SEC or if there will potentially be new policies. It’s unclear where crypto is going to go in the US” regulatory perspective. On top of regulatory overhang, JPMorgan said on Thursday that bitcoin’s correction “can be partially attributed to a broader correction in equities and especially risk assets like tech, which in turn has led to frothy positions in tech, high appears to be driven by real U.S. yields and growth concerns about China,” but it “sees limited downside for crypto markets in the near term.” Trading data also suggests that long-term investors may be taking a back seat from recent weakness. are not easily swayed. According to Glassnode, investors who have held their bitcoin for a year or more now account for nearly 70% of bitcoin holders. The latest group of long-term holders — specifically, those who have Bitcoin held for one to two years – has fallen since the beginning of the year (36%), but the number of people who bought two to three years ago has declined (85.8%). The number and percentage of bitcoins mined are hovering near all-time highs. This tells us that long-term holders are unwavering, despite the price volatility and the recent downdraft in price. This fact, combined with the reward halving next April, could be a springboard for higher prices in the future, Greg Cipollaro, global head of research at NYDIG, the crypto subsidiary of Stone Ridge Asset Management, told CNBC. He added that although it is unclear what exactly is causing traders’ resilience, mature crypto investors are “becoming more aware of the cycles associated with bitcoin halvings and are expecting it to repeat itself, leading to an increase in value.” will increase.” —CNBC’s Michael Bloom and Nick Wells contributed reporting.
Source: www.cnbc.com
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