Schlagwort: crypto business

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Should you buy Ethereum amid lagging behind Bitcoin in 2023?

  • Leading cryptocurrencies started 2023 with positive momentum
  • Bitcoin, Doge, Ripple, and Ethereum move in a direct correlation
  • Ethereum has more room to rally

The cryptocurrency market started  2023 with positive momentum. As a result, all leading cryptocurrencies gained against the US dollar, and the so-called “crypto winter” from 2022 vanished.

Bitcoin is clearly the leader. It bounced strongly from the 2022 lows after losing about -65% of its value. The direct correlation between Bitcoin and the rest of the cryptocurrency market is well known, but something interesting has happened since the start of 2022.

More precisely, the correlation weakened. Sure enough, other cryptocurrencies follow when Bitcoin enters a bullish or bearish market. Only this time, the extent is different.

ETHUSD chart by TradingView

Ethereum lags behind

The chart above shows the four leading cryptocurrencies and how they performed against the US dollar – Bitcoin, Doge, Ripple, and Ethereum. The correlation is obvious, but Ethereum lags.

In 2022, Ethereum fell by the most. It lost over -70% of its value before the recent rally.

While it did rally in 2023, following Bitcoin’s lead, it lags behind. More precisely, while Bitcoin, Doge, and Ripple moved more or less in a synchronized fashion, Ethereum bulls fell behind.

The recent rally reduced the cryptocurrencies’ losses against the US dollar, but not to the same extent. For instance, BTC/USD is now -49.86% lower than it was in January 2022. However, ETH/USD did not recover as much, and it is down -57.85% over the same period.

In other words, if one believes that the US dollar’s weakness continues, then it might be appropriate to bet on Ethereum’s rallying more than Bitcoin, Doge, or Ripple.

On Wednesday, the Federal Reserve of the United States is about to announce its interest rate decision for the first time in 2023. A press conference will follow the announcement, and the US dollar’s volatility will reach extreme levels.

The post Should you buy Ethereum amid lagging behind Bitcoin in 2023? appeared first on CoinJournal.

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4 bearish factors for Bitcoin this week

  • The Federal Reserve meeting scheduled on Wednesday may be hawkish for the dollar
  • Bitcoin might give up some of its 2023 gains on a hawkish Fed
  • All eyes are on the Fed’s view on inflation, growth, future interest rates, and quantitative tightening

The Federal Reserve’s monetary policy decision is scheduled this week. It is the first time the FOMC (Federal Open Market Committee) meets in 2023, and the stakes are high for the US dollar.

Bitcoin has strengthened against the US dollar in January so far, in sync with other fiat currencies. Therefore, whatever the Fed decides on Wednesday will affect Bitcoin price too.

A hawkish Fed may turn up being bearish for Bitcoin. These are the four areas where the Fed may express its hawkishness: inflation outlook, growth outlook, interest rates level, and quantitative tightening.

Inflation outlook

The Fed is committed to bringing inflation to its 2% target. This is why it has raised rates so aggressively, so if the Fed says that inflation is embedded and upside risks remain, then the US dollar should move higher.

In this scenario, the market will bet that the Fed sees ongoing rate hikes as appropriate.

Growth outlook

The currency stance is that a sustained period of below-trend growth is likely. If the Fed changed its view and sees recession required to have a material impact on the inflation outlook, that would also trigger a sharp move higher in the dollar.

Interest rates

Ultimately, it is all about the interest rate level. The funds rate range has reached 4.25%-4.50%, and all eyes are on what the Fed does and says on Wednesday.

The base case scenario is that the Fed will hike by 25bp and says that ongoing interest rate increases are appropriate. Therefore, anything more than that should be bullish for the dollar and bearish for Bitcoin.

For example, the Fed might hike 50bp. This is a risk going into the meeting, especially considering that inflation is not backing down as fast as initially thought.

Quantitative tightening

The Fed currently shrinks the balance sheet at a pace of $95 billion/month. A decision to accelerate the balance sheet reduction would be very hawkish for the dollar.

The post 4 bearish factors for Bitcoin this week appeared first on CoinJournal.

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Crypto stocks poised as Bitcoin holds $23K ahead of FOMC

  • Bitcoin miners Core Scientific rose 33% as stocks of Bitfarms, Stronghold Digital, CleanSpark all ended the past week higher.
  • Coinbase and Robinhood shares also rose as Bitcoin broke above $23,000.
  • FOMC meeting is this week and the market reaction will be key to what next for Bitcoin and crypto stocks.

A number of crypto-related stocks are looking to extend gains notched in the past few days after closing in positive territory on Friday.

Among those to rip are share prices of crypto mining firms that had been struggling badly after reaching new all-time lows amid the crypto winter. 

This is happening even as Bitcoin price looks to push higher after holding above the $23,000 level over the weekend. A crucial macro news event to watch out for is the FOMC meeting this week.

Surge in Bitcoin price helped crypto stocks

Core Scientific (CORZ), the world’s largest publicly-traded Bitcoin miner, surged an impressive 33% on Friday, while crypto mining firm Digihost Technology (DGHI) saw its shares jump more than 11%.

Stocks of NASDAQ-listed miners Bitfarms (BITF), Stronghold Digital Mining (SDIG), Bit Digital (BTBT) and CleanSpark (CLSK) all ended the week in the green. Elsewhere, NYSE-listed Bit Mining and SOS ADR also rose.

Coinbase (COIN) and Robinhood (HOOD) stocks also traded higher, with the US-based crypto exchange’s stock soaring more than 15% on Friday. Coinbase‘s stock is up more than 73% in the past 30 days before markets open on Monday, 30 January. Robinhood shares ended the week 8% higher and were up nearly 28% over the past 30 days.

Bitcoin price, FOMC – what next for crypto stocks?

As noted, most of these publicly listed crypto companies saw their share prices soar alongside the positive price action of Bitcoin. But crypto has also largely correlated with stocks, with this week crucial in terms of the Federal Open Markets Committee (FOMC) meeting. 

On the positive side of things…

BTC/USD reached highs of $23,955 last week and is up more than 40% year-to-date. According to recent data from crypto analytics platform Glassnode, BTC’s recent upside momentum has the flagship digital asset’s price above three key on-chain metrics.

The breakout above $22,800 had Bitcoin above both the long term and short term cost-basis as well as Realized Price – the first time this has happened since 2020 COVID-19 induced crash. Also, the previous time when prevailing BTC price was above the three metrics was during the 2018/19 bear market.

On the flipside…

As covered by CoinJournal, Glassnode suggested last week that bulls managing to hold above the $22.4k level would aid sentiment and potential further gains. However, this week could see recent momentum derailed if investor reaction to the Federal Reserve’s FOMC minutes turns out to be negative. 

Although the market already expects a 25 basis point rate hike, some experts believe it would be a disaster for the markets if the Fed goes for a 50 basis point hike instead.

According to CoinGecko, Bitcoin was trading 1.1% down at 7:15 am ET on Monday as FOMC-related volatility likely began to set in across markets.

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Floki Inu DAO approves proposal to burn over $100M worth of FLOKI tokens

  • FLOKI’s price has rallied by over 100% in the past week.
  • It has hit a daily high of $0.00002973 today rallying on the news of the passed proposal.
  • The passed proposal will see Floki Inu burn about 4.97 trillion FLOKI tokens.

The Floki Inu DAO has finally passed the “Remove the FLOKI transaction tax and burn the bridge tokens” proposal. As reported in our earlier news, the proposal was opened for voting on January 27 causing significant price movements immediately after it was announced.

The voting proses was concluded on January 29 with 99.97% of the participants voting in favour of the proposal.

Screenshot of how Floki Inu DAO voted. Source: snapshot.org

 The price of FLOKI token has surged slightly because of the news, with the token gaining about 8% at press time to trade at $0.00002415.

What next after approving the proposal?

According to the information provided by Floki Inu, the proposal determined the future of two things for the Floki Inu community which are:

  • The original Floki cross-chain bridge.
  • The 3% tax on the FLOKI token.

The proposal sought to have the original cross-chain bridge disabled and the tokens in the bridge burned since the bridge posed some vulnerability threats. Floki Inu narrowly dodged a bullet last year when the cross-chain bridge was briefly exploited forcing the team to quickly disable the bridge to limit the exploit’s impact.

Now that the DAO has voted to pass the proposal, the team will go ahead and disable the main cross-bridge and embark on burning the FLOKI tokens that were in the bridge. The 3% buy and sell FLOKI transaction tax will also be drastically reduced to a 0.3% tax which is the default tax/fee on most decentralized exchanges like Uniswap (UNI/USD).

On timelines, the FLOKI transaction tax will be lowered to 0.3% effective 8 PM UTC on February 3, 2023, while the 4.97 trillion tokens will be permanently burnt at 8 PM UTC on February 9, 2023. As of the price of FLOKI today, the planned token burn is worth about $100 million.

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Pro: the recent rally in Bitcoin may not be ‘sustainable’

  • Katie Stockton expects a pullback in Bitcoin price ahead.
  • She explained her “neutral” view on CNBC’s “Squawk Box”.
  • Bitcoin has climbed roughly 40% since the start of 2023.

Bitcoin has now surpassed the key $23,000 level but Katie Stockton of Fairlead Strategies continues to recommend caution as the recent rally could reverse just as easily.

Stockton defends her stance on CNBC

Year-to-date, the first ever decentralised cryptocurrency has gained about 40% – a strength she says is an opportunity for investors to pull out.

Reiterating her “neutral” stance on Bitcoin, Stockton said this week on CNBC’s “Squawk Box”:

When you see such strong, steep rallies, they’re more characteristic of countertrend moves. At one point, we had 14 consecutive up days this month for BTC. So, we’re sceptical to its sustainability and see it as countertrend.

The upcoming week is a crucial one for Bitcoin because of the Fed’s announcement. The CME FedWatch Tool currently signals a more than 98% probability of a 25 basis points hike this time.

Bitcoin has broken above its 200-day MA

Also on Sunday, a top trader and analyst, Peter Brandt warned of a near-term pullback in BTC. Others, including Michael van de Poppe and Credible Crypto have a similar opinion as well.

Interestingly, Bitcoin is now trading meaningfully above its 200-day Moving Average. Still, Katie Stockton said:

This has happened before and it proved to be a false breakout. So, we’re not convinced we have a breakout here. But it’s an incremental positive. We hope this manifests in our longer-term indicators which still very much point lower.

She’s not particularly constructive either on the benchmark S&P index that’s up more than 6.0% for the year at writing.

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