The cryptocurrency market continues to struggle due to an unfavorable economic outlook. Bitcoin (BTC), the largest cryptocurrency, is down over 50% from its all-time high. BTC is down almost 2% in the last 24 hours and is currently trading at $19,141.
However, an expert reveals that the crypto market, including Bitcoin, will rise sharply.
Why Bitcoin (BTC) will skyrocket
University of Pennsylvania professor Jeremy Siegel believes the stock market is currently undervalued and will rise 20-30% over the next year. He believes the Federal Reserve is taking away any enthusiasm from the market.
The crypto market is highly correlated with the general stock market. Bitcoin, in particular, is highly correlated with the technology-focused NASDAQ-100. According to Coinbase Research, crypto assets have a beta of 2 relative to the broader stock market. In simpler terms, crypto will see twice as much price movement as the broader market. In this way, Bitcoin behaves similarly to tech stocks or oil.
Coinbase research also shows that the crypto winter was mostly about the macroeconomic outlook and not the crypto industry.
The Federal Reserve, maintaining a hawkish stance and raising interest rates, caused a massive sell-off in the crypto market. However, the Fed’s stance has also brought with it the risk of a recession. According to Siegel, the risk of recession outweighs the costs of inflation in the economy.
He also stresses that the Fed will turn around shortly if it follows the long-term trends. According to him, the central bank should give time for the rate hike to take effect.
Siegel has always been optimistic about the stock market. However, he is not the only one who believes that the crypto market will skyrocket in the long term. As CoinGape previously reported, many whales went long on Bitcoin.
Will the Fed pivot
Bitcoin will rally if the Federal Reserve halts rate hikes or pivots. While Siegel believes the Fed will soon turn around, his opinion is at odds with the central bank’s opinion. At the FOMC meeting, the Fed specifically stated that the cost of doing too little to curb inflation is much greater than the cost of doing too much.
Nidhish is a technology enthusiast whose goal is to find elegant technical solutions to solve some of society’s biggest problems. He is a strong believer in decentralization and wants to work on mainstream adoption of blockchain. He is also a huge fan of almost every popular sport and loves to chat about a variety of topics.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication assumes no responsibility for your personal financial loss.
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