CoinDesk Learn Editor Ollie Leech explains the latest in Bitcoin and where the cryptocurrency’s price could be headed this summer.
Bitcoin prices are moving too much today. It’s hovering just below 33,000. But in the past, let’s see, what is it – five days, you can see it off just around 3%. In the past month, it’s off almost 20%. So let’s talk about some of the downward pressure that we’ve seen and what this could mean for Bitcoin going forward. For that, we want to bring in Ollie Leech. He’s CoinDesk’s Learn Editor.
And Ollie, I guess the pressure that we’ve seen most recently, specifically, I guess, over just the last five days, off just around 3%. For Bitcoin, maybe that’s not that big of a deal. But what do you think is the biggest factor here behand some of the pressure that we’ve seen?
Ollie Leech: Yeah, absolutely. So I mean, Bitcoin’s been range bound now between that $40,000 and $31.000 mark now for almost 50 days. We haven’t seen a liquiditiy grab this month beneath that critical support. So volatility has dropped off. The market’s ost a lot of fizz that it had in Q1 and Q2. And I think that could be sesonanality. This time, summer in the Northern Hemisphare, we usually see crypto prices slump. And August for Bitcoin is usually the worst month.
And we’re now approaching it could be institutional investors pulling out of Bitcoin back into US dollars now that inflation is surging. The economy seems to be recovering. And so they might want to repurpopose that cash.into stock markets, ready for when the companies come back into play.
On the retail side, there’s just not a great deal of excitement, really in the markets. You know, a lot of that is driven through speculation. There’s obviously lingering effects of China’s clampdowns. And more recently, obviously the string of regulatory clashes with Binance. So it’s just kind of painting a bit of a miserable picture in the short term.
Has anybody ever done some kind of calculations to determine if it truly is perhaps a better store of value, say, than gold over a two-year or three-year period with the swings? Because the swings with gold aren’t nearly as dramatic as you see with Bitcoin. But just because they’re dramatic doesn’t mean that it’s worse or better, say, than gold.
Yeah, for sure. I mean, it really depends on especially with Bitcoin, it depends which year or two years you look at on this chart. So obviously, more recently, from the recovery from the coronavirus, when we had that annaouncement in March. It was down at sort of $3,600. It went all the way to $65,000. It’s obviously not held that range particularly well, obviously, more recently. So yeah, it depends on how you look at it. Obviously, the things to take into account is Bitcoin is only 12 years old, you know?
And things like gold have been around since almost 3,000 years before Christ. And, you know the dollar’s going to be 230 years old. So as an inflatoion hedge, it’s highly volatile.I think it has every capacity to be a good inflation hedge. But we’re just not seeing that at the moment with its volatility.
Ollie, do you think the recent action that we’ve seen, has this spooked maybe first-time investors in Bitcoin? The people who have still remained bullish on Bitcoin, are those mor of those long-term type of investors who have been bullish now for quite some time?
Yeah, I think so. I mean, if you look at a lot of the causes of the crash from the heights of $65.000, a lot of that was retail driven. People have only been invested for a matter of weeks. If you look at the on chain data and how long peple — some of these wallets have been holding Bitcoin, you can see that being less than two weeks — in some cases, one. So people are obviously jumping in at tha $60,000 mark excitedly and then, obviously, when it started to unravel, they were getting straight out, you know, straight out. So yeah, a lot of that right now is, I think is instituutionalists holding it up, which is waiting for some sor of fundamental factor to really kickstart another bull run. But right now, there’s nothing really exciting happening.
Ollie, what do you think is going to be the biggest driver of Bitcoin here, at least over the short term?
I think, well, the ETFs are certainly an exciting point right now. And I know the WisdomTree one recently is currently sort of going back and forth between the SEC and WisdomTree. And obviously, Grayscale have now stepped up, and they’re now looking to push a Bitcoin ETF and actually convert their Bitcoin trust into an ETF with the help of BNY Mellon. I think that could really create a lot of bullish momentum and really kickstart this new cycle off again and sort of potentially push Bitcoin back to its former highs.
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