BTC Asset Investors Must Know Causes of This Crypto Winter

"The digital asset has been moving in a fairly clear range for the past few weeks, trading between US$16,000 and US$17,000," said CoinDesk, quoted by the business and financial media.

In the past, cryptocurrencies have often been praised for having little correlation with the price movements of other assets, a characteristic that makes them useful for achieving diversification.However, this situation has changed, as cryptocurrencies have started to follow other asset classes, such as stocks, more closely over time.

“The biggest variable affecting BTC assets right now, unfortunately, is correlation,” said Tim Enneking managing director of Digital Capital Management, of note to Bitcoin investors.

“Assuming the correlation remains high (and there is no reason to assume otherwise), the crypto market is tied to the fiat market, and this means inflation and interest rates,” he added.

According to Enneking, because interest rate increases have started to slow down, and will almost certainly stop no later than mid-March.“This comes after maybe the last 50 bps hike on Feb. 1 and then the first and last 25 bps hike. I will not be looking for a big break for BTC until then,” said Enneking.

He made particular reference to the various rate increases Federal Reserve officials have implemented this year, which have resulted in the target range for the benchmark federal funds rate increasing 425 basis points since March.Looking ahead, many market watchers expect the Fed to raise its benchmark interest rate further, although no one knows for sure by how much.

Members of the Federal Open Market Committee predict the federal funds rate will reach a maximum of 5.1 percent by 2023, according to media estimates provided by officials who attended last month's policy meeting. These results were included in the Summary of Economic Projections, a document released December 14.After commenting on the developments, Enneking offered a near-term view of the cryptocurrency.

“The good news is that BTC assets are on really solid bottoms, which is what everyone was haunted by by the US$6K base from late June to early November 2019, which felt like rock bottom until it crashed and BTC left. to US$3,000 more in four months," he said.

“Since the fall from Celsius, Terra/Luna, FTX, Alameda, etc., has slowed down markedly, our feeling is that we are at or very close to a bottom (which is US$15,500),” said Enneking.

"It's strange to write these lines, a good few days on Wall Street, and we're about to see BTC threaten US$20,000."Joe DiPasquale, CEO of managed cryptocurrency hedge fund BitBull Capital, also weighs in on the near-term prospects of digital assets. "Right now, many are expecting a capitulation of under US$10,000," he said.

“However, we don't think the odds of such a possibility are higher than Bitcoin hitting a low of around US$13,000-US$15,000.”

Marc Bernegger, co-founder of crypto funding firm AltAlpha Digital, offers a different view on the matter.

“Bitcoin has gone through a similar phase in recent years that can be summed up as a ‘time of ignorance and disinterest,’” said Bernegger."We've seen some very negative events in the last few weeks and months and many investors are losing faith in BTC assets as a potential hedge during traditional market downturns," said Bernegger.“Many of the fundamentals are showing bottoms at actual price levels and investors such as hedge funds, family offices and asset managers are waiting on the side to (re-)allocate some of their alternative assets into BTC,” he added.