This week was full of surprises because even those weren’t part of the crypto niche. Bitcoin [BTC] and other cryptocurrencies continued their rise.
Now that Bitcoin is above a historical accumulation signal, the question is whether it can reclaim its title as an inflation hedge.
Bitcoin fights back
Earlier this week, following the Fed’s 75 basis point rate hike, the Biden administration confirmed that the country had entered a technical recession. After the country’s GDP contracted for the second consecutive quarter, the situation worsened. However, the crypto market rallied over $124 billion in the same period between July 26 and press time.
Total Crypto Market Cap | Source: TradingView – AMBCrypto
Bitcoin benefited from the broader bullish signals in the market. It surged from the $19,000 lows to $20,000 and was trading at $23,919 at the time of writing.
The investor catch
Additionally, two significant developments are emerging for Bitcoin as of now. The first is to recapture the 23.6% Fibonacci level and the other is to escape from the market bottom.
Bitcoin Price Action | Source: TradingView – AMBCrypto
The gradual rise from the June lows helped Bitcoin sustain and reach the current trading price, and the Fibonacci level, from the lows to the April market high, shows BTC’s next critical stop at $26,000.
This price point is slightly above the 23.6% Fib line, which is crucial for BTC as it can provide the support Bitcoin needs to continue its rally. Second, the recent rally allowed the market value of the king coin to break out of the market lows that BTC hits when the asset is severely undervalued. After staying more than a month in the same for the first time in 28 months, this is a win for Bitcoin.
Bitcoin Market Value | Source: Glassnode – AMBCrypto
So with the win comes concern for the future of BTC as the coin and crypto markets do not operate individually. The correlation that King Coin shares have with the stock indices is still quite high, as both the NASDAQ and S&P 500 indices are up equally over the same period this week.
Thus, despite the recovery, Bitcoin is still unable to act as an inflation hedge. This makes investors far more vulnerable thanks to the deteriorating economic situation.
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