There are various factors which can influence the value and growth of any stock or security. The rise of bitcoin in the past has been attributed to things like inconsistencies and issues in the fiat market for currencies or worries about traditional stocks and securities not maintaining a consistent value. In the crypto world for instance, some experts are beginning to make positive predictions about the futures of cryptocurrency, particularly as Goldman Sachs partnered with Galaxy to support bitcoin trading. The rise of Goldman in the crypto landscape indicates that there will soon be a wider degree of acceptance in the global market for all kinds of digital currencies.
At the same time, experts are sharing their own thoughts on risk factors that might be delaying the bitcoin bull market form rising. For instance, analysts like Willy Woo say that he doesn’t think bitcoin is going to enter bear market rankings at the time of writing. According to the analyst, stronger hands are continuing to accumulate.
What Might be Preventing a Bear Market?
There are plenty of factors which might be preventing the cryptocurrency market from entering a bear status at the moment. As you learn how to trade bitcoin, you’ll discover that all kinds of factors can change the market’s general attitude towards it. Unlike investing in a traditional currency, purchasing follows different rules and guidelines. Bitcoin buying isn’t like investing in standard cash, or even buying a bond or stock.
Instead, when you’re investing, it’s almost as though you’re investing in an idea. Unlike investing in a traditional currency, it isn’t issued by a bank or government, which means the monetary policy, economic growth measures, and inflation rates aren’t going to impact the growth levels in the same way. Rather, costs are often influenced by a supply and demand ratio, as well as the cost of producing through the mining process.
Other factors that can affect cryptocurrency include regulations governing the sale, and internal governance. Some investors may be concerned that the predicted global adoption of cryptocurrencies by all kinds of banks and financial partners may reduce the demand for the solution as an anti-inflation measure and diversification factor for trading environments. However, Willy Woo notes that, looking at the network to value metric for transactions, which you can calculate by dividing the market cap of Bitcoin by the on-chain transactional volume, the BTC environment is currently undervalued by a massive level.
Woo believes that the bull market for bitcoin will stay intact, but the price expansion might be delayed if investors continue to take a risk-off approach to the space, and move more of their capital into the US dollar. Moving more capital to the US dollar has even more issues associated with it at the moment, as the Fed is taking an interesting approach to keeping interest low, which has caused a lot of conversation in the market about the safety of the currency.
Bitcoin’s Market Value at Present
Currently, price fluctuations in the spot rate costs of the cryptocurrency exchanges are often influenced by a host of factors. Volatility is often measured in traditional markets by the volatility index, which is referenced as the CBOE index. However, a volatility index has also become available for bitcoin recently. This aims to track the volatility of the leading cryptocurrency in the world. For those with a knowledge of bitcoin history, it’s easy to see that the value of the currency has been quite volatile in years past. In the three months between October 2017 and the January of the year following, volatility in bitcoin’s pricing raised to around 8%, representing around twice the volatility levels of the currency in January 2020.
There are various factors which may cause Bitcoin to rise or fall in value. Bad news and events, for instance, can often hurt adoption rate of Bitcoin. In times where uncertainties are heavy, people in the trading environment may prefer to move into more well-known and comfortable assets. Woo noted that he is concerned a major correction in equities – one of the markets suffering in the US right now – might pull the bitcoin value downwards, regardless of what on-chain fundamental statistics predict. For investors considering the benefits of moving some of their portfolio into a cryptocurrency environment, now may still be a good time to make a start. The bear market may be on the horizon, which means now is the moment to begin planning where and how you’re going to invest when the right moment strikes.