The cryptocurrency market remains relatively weak compared to other asset classes.
At last check, it appeared that bitcoin had found a local bottom and was preparing for a more concrete recovery, but that has not happened so far.
The price of bitcoin currently seems trapped in a trading range between approximately 84,000 euros and 93,000 US dollars. Since the price has been in this area for almost a month, a breakout from this range could mean a more pronounced continuation of the move towards the breakout.
There is considerable uncertainty in the market. Stock markets are also not in a clear upward trend – apart from fears of a possible bubble in the field of artificial intelligence, more and more attention is focused on the decision of the Bank of Japan, which, according to analysts, should raise key interest rates.
This is crucial because of the so-called yen carry trade, which means that an investor borrows money in yen at a very low interest rate and then invests it in assets in other currencies with higher returns. The profit comes from the interest rate difference, while the risk arises if the yen suddenly strengthens or market conditions reverse, reports SEEbiz. We are currently in a period of volatile conditions, which could cause major changes in capital allocation in many financial institutions. Such dynamics usually bring increased volatility and redirection of capital towards safer investments.
For riskier financial instruments, which include cryptocurrencies, such an environment is not favorable in the long run. As has been repeatedly pointed out, cryptocurrencies have been significantly weaker than most other asset classes over the past two months. Additional global uncertainty could further exacerbate already challenging conditions in the crypto market.
Despite this, US spot bitcoin ETFs saw very strong inflows yesterday. More than $457 million in net inflows were recorded in one day, which is a lot even for established products. Fidelity’s FBTC attracted the most, around $391.5 million, while BlackRock’s IBIT saw an additional $111.2 million in inflows. This shows that there is concrete investor interest in the largest cryptocurrency at current price levels and that these levels represent a buying opportunity for many. Bitcoin’s dominance meanwhile has grown to around 60 percent, which means that capital is on average returning to bitcoin from alternative cryptocurrencies, i.e. that bitcoin is gaining market share compared to the rest of the crypto market.
