Bitcoins bullish momentum expected to endure says analyst
Bitcoin’s correlation with macro factors continues to be a widely discussed topic as both global monetary policies and the price of the cryptocurrency have experienced a decline in the past month. In an interview with CNBC, Lucy Gazmararian, the founder and managing partner of Token Bay Capital, stated that Bitcoin can move in sync with the stock market. This trend is becoming more apparent as digital assets become intertwined with traditional finance. Analysts have established a correlation between Bitcoin and macroeconomics due to factors such as geopolitical uncertainty and the monetary policies implemented by the US Federal Reserve, such as interest rate changes.
However, there are scenarios where the correlation breaks down. Historically, investors have viewed Bitcoin as a “risk on” asset and a hedge against inflation. Gazmararian mentioned that BTC fundamentally differs from other asset classes like bonds and equity, leading to occasional deviations from the established correlations.
Despite Bitcoin’s 9% drop in the past month and concerns about US inflation, Gazmararian believes that the Bitcoin bull run is only halfway through, at most. She referred to previous “four-year boom busts” observed in the crypto markets, indicating that the ongoing market retracement is a normal occurrence, especially after the halving event. Gazmararian explained that drops of 10%, 15%, or even 30% are consistent with past cycles. Historical data from BiTBO and TradingView reveals that Bitcoin has never returned to its pre-halving prices after completing the transition. Based on this pattern, Gazmararian predicted that there may be a Bitcoin peak in late 2025.
On the other hand, Gazmararian suggested that the continuation of Bitcoin’s bull run could be in question if the asset’s value declines by more than 50% in the coming months. Such a drop would push Bitcoin below $32,000 at current levels. According to IntoTheBlock, over 84% of long-term Bitcoin holders are currently in profit, while 71% of short-term buyers are experiencing losses. Those in the latter category purchased the cryptocurrency at prices between $52,490.68 and $71,050, meaning significant declines could lead to substantial losses for many buyers.
In conclusion, Bitcoin’s correlation with macro factors and traditional finance remains a topic of interest. The ongoing market retracement is seen as a normal occurrence in the context of historical boom and bust cycles. However, the future trajectory of Bitcoin’s bull run may be influenced by factors such as significant price declines.