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Renowned Finance Author Reveals Why Bitcoin Is A Poor Hedge Against Market Crash

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Lebanese-American finance author, Nassim Nicholas Taheb has declared that Bitcoin (BTC), the world’s largest cryptocurrency, is a poor hedge against market crash. The author has publicly disputed other analysts’ perspectives of Bitcoin as a hedge and store of value, highlighting its speculative nature and price instability.

Bitcoin’s Limitations As A Hedge Against Market Crash

In a heated debate on CBNC’s Squawk Box, Taleb discussed the role of Bitcoin modern finance, highlighting that its touted role as a hedge against inflation or market crash have been overstated. Known for his criticism against BTC and a general dislike for the crypto industry, Taleb argues that Bitcoin is an extremely speculative and volatile asset.

He disclosed that the cryptocurrency’s speculative nature undermines its potential to be a reliable store of value during periods of economic turmoil. Taleb has based his criticism on Bitcoin’s recent crash, which saw its price dropping by more than 20%. 

The finance author disclosed that the cryptocurrency’s massive downtrend proves “once again that it is not a hedge against assets melting.” Earlier in July, the Bitcoin market was plagued with large scale liquidations, triggered by Mt. Gox’s BTC distribution plans and sell offs executed by the German government. 

Presently, the cryptocurrency is witnessing a significant decline in its price following the crash of the Japanese stock market and the adverse effects of regulatory pressures and macroeconomic factors. At the time of writing, BTC is trading at $57,333, marking a 13.09% decrease over the past seven days, according to CoinMarketCap. 

While speaking on BTC’s recent crash, Taleb compared the pioneer cryptocurrency to gold. The financial author suggested that gold was a superior store of value compared to Bitcoin. He illustrated this by noting that a piece of gold chain left on the ground for 10,000 years would still retain its intrinsic value, underscoring gold’s enduring value and stability over time.

On the other hand, BTC, as a digital currency, lacks the tangible and relatively stable characteristics of gold. Taleb contends that the digital asset falls short of being a real currency, highlighting the cryptocurrency’s shortage of fundamental attributes that make gold a reserve of value. 

BTC Dismissed As “Crazy Asset”

While highlighting Bitcoin’s limitations as a hedge against market crash, Taleb criticized the cryptocurrency’s fundamental nature as a digital currency. The financial author described the cryptocurrency as a “crazy asset,” highlighting that “crazy people” were driving its price upwards. 

He also stated that BTC was akin to a highly priced real estate in Manhattan used to attract the stock market. While he acknowledged that he has invested in the cryptocurrency, the finance author also asserted that Bitcoin was “useless.” Taleb further clarified that it was not useful in an economic system to have an asset that surges from $10 to $60,000 when looking for price stability.

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BTC trading at $54,926 on the 1D chart | Source: BTCUSDT on Tradingview.com

Featured image from LinkedIn, chart from Tradingview.com



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Bitcoin Correction Looms As Analyst Predicts Fall To $85,600

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The price of Bitcoin (BTC)  rose by 7.99% in the past week to reach a new all-time high of $99,655 on November 22. Thereafter, the maiden cryptocurrency has experienced a slight retracement in the past 48 hours falling to around $98,200. However, speculations of a major price correction continue to emerge considering BTC’s impressive price rally over the past seven weeks.

Why Bitcoin Must Move Above $100,535 – Analyst

In an X post on November 23, Ali Martinez shared an intriguing prediction on Bitcoin’s potential price movement. According to the popular crypto analyst, the TD Sequential, used to spot potential price reversals, has indicated a sell signal on Bitcoin’s 12-hour chart, suggesting an incoming price dip. 

Martinez’s latest forecast aligns with popular expectations of a Bitcoin price correction amidst the asset’s 61.76% price gain from $60,500 in early October. This notion stems from various trading metrics and indicators. For example, Bitcoin’s Relative Strength Index has perpetually remained in the overbought zone suggesting potential for a sudden price pullback.

Furthermore, fellow analyst Maartunn reports that BTC’s Fear & Greed Index has a 4.5-year high of 94. Generally, any Fear & Greed Index above 75 represents extreme greed among investors, which is overwhelmingly bullish but also presents room for overvaluation that precedes significant price corrections.

Of more concern, Maartun also notes that Bitcoin traders’ unrealized profit levels have reached 57% and are gradually approaching the local peak of 69% in March 2024 adding to the increased potential of price correction.

 

Bitcoin
Source: @ali_charts on X

According to Ali Martinez, if BTC undergoes the much-anticipated correction as indicated by the TD Sequential and other factors, the crypto market leader could fall to $91,583. Amidst strong selling pressure, Bitcoin could further slide to $85,610 indicating a potential 12.64% decline from its present market price. 

However, Martinez also postulates that BTC could nullify the sell signal by the TD Sequential and avoid a major correction by closing above $100,535 on the 12-hour daily chart. Considering Bitcoin’s recent price movement and events such as excitement around Donald Trump’s electoral victory alongside increased ETF inflows, an uptrend continuation is definitely a strong possibility.

BTC Price Overview

According to data from CoinMarketCap, BTC trades at $98,213 reflecting a 0.44% decline in the past day. In tandem, the asset’s daily trading volume is valued at $44.02 billion having declined by 43.14%. However, Bitcoin remains largely profitable for long-term holders with gains of 45.06% in the past 30 days. With a market cap of $1.95 trillion, the premier cryptocurrency remains the world’s largest digital asset.

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BTC trading at $98,212 on the daily chart | Source: BTCUSDT chart on Tradingview.com

Featured image from Fortune, chart from Tradingview



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Bitcoin Price Is Decoupling From Gold Again — What’s Happening?

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Bitcoin has often been referred to as the “digital gold,” as it has proven to be a unique asset class and, more importantly, a reliable store of value over the years. While gold surely outpaces BTC in age, both assets are commonly used by investors as a hedge against economic instability and inflation.

Interestingly, there is almost always a positive correlation between Bitcoin and gold, leading to limited diversification opportunities for investors. However, the latest data shows that the premier cryptocurrency and the precious metal have been decoupling from each other in recent weeks.

BTC Is Losing Correlation With Gold — What Next?

In a recent Quicktake post on the CryptoQuant platform, an analyst with the pseudonym Darkforst talked about the existing relationship between the price of Bitcoin and gold. According to the pundit, there is an ongoing decoupling between the crypto market leader and the gold market.

For context, correlation is a metric that measures the degree of association (how closely related) of the direction of prices of two specific assets. When the value of correlation is positive, it implies that the two assets are moving in the same direction. It is worth mentioning that the closer the metric’s value is to 1, the more correlated the assets are.

On the flip side, a correlation value less than 0 indicates that the two assets are negatively correlated, meaning that they are moving in opposite directions. Similarly, the closer the correlation value is to -1, the less closely related the assets.

While the gold market has been performing well in recent months, the metal’s price has slumped over the past few weeks. On the other hand, the Bitcoin price has enjoyed a strong bullish momentum in November, forging successive all-time highs in recent weeks.

quicktake-image

Source: CryptoQuant

As a result, the correlation between the price of Bitcoin and gold has slipped beneath the zero mark, moving into the negative territory, as shown in the chart above. According to Darkfost, the decoupling seems to be in BTC’s favor, as it could lead to a “liquidity shift” and cause more capital to flow into the flagship cryptocurrency.

Bitcoin Price At A Glance

As of this writing, the price of BTC is hovering around the $98,000 mark, reflecting an almost 1% decline in the past 24 hours. Nevertheless, the premier cryptocurrency’s performance on the weekly timeframe is still quite remarkable. According to data from CoinGecko, the market leader is up by more than 7% in the last seven days.

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The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from iStock, chart from TradingView



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Bitcoin Price And Satoshimeter: Analyst Says $100,000 Is Far From The Peak

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The Bitcoin price rally towards the $100,000 mark is the talk of the crypto industry. Notably, the Bitcoin price has reached new all-time highs for four consecutive days on the path to this $100,000 price level, with the latest being an intraday high of $99,645 in the past 24 hours. 

Interestingly, the ongoing bullish sentiment suggests this rally is far from over. According to one crypto (Stockmoney Lizards), Bitcoin is still in the middle of its projected peak this cycle, and the current pump is just one phase of a larger upward trajectory.

Satoshimeter Says Bitcoin Price Still Has A Long Way To Go

The Satoshimeter is a technical analysis tool developed by Stockmoney Lizards. The Satoshimeter uses on-chain data to monitor Bitcoin’s market cycles and has been relatively good in predicting market peaks and lows. For instance, readings around 1.6 typically mark the low points of bear markets, as seen in years like 2011, 2015, 2019, and 2022. On the other hand, the peaks of bull markets are highlighted by readings above 20 on the Satoshimeter.

The Bitcoin price rally has witnessed a notable surge since the beginning of the year and is showing no signs of stopping anytime soon. Particularly, the Bitcoin price is up by 163% in the past 12 months, according to Coinmarketcap data. Despite Bitcoin’s ongoing rally, the Satoshimeter currently sits in a mid-range area, suggesting that the cryptocurrency has substantial room for growth before reaching a cycle peak. 

Stockmoney Lizards emphasized that while the recent price surge might see short-term corrections, these are part of a healthy market trajectory. This implies that the Bitcoin price could see periodic pullbacks as it consolidates gains, but the Bitcoin price at $100,000 is definitely not the peak for this cycle.

Bitcoin price
Source: X

Long Road Ahead For BTC Price

A final break above $100,000 would undoubtedly be a major milestone for the Bitcoin price history. However, the current market sentiment suggests it would only be the first step of many milestones to hit this bull cycle. For instance, crypto analyst Stockmoney Lizards projected in another analysis that the Bitcoin price is about to enter a second parabolic run that would see it surging past the $120,000 price mark by April 2025.

Although this price target is very bullish, it pales in comparison to projections from other crypto analysts. PlanB, the creator of the popular Stock-to-Flow (S2F) model, has put forth an even more ambitious target. He suggests that Bitcoin could reach trade for as high as $1,000,000 by December 2025. Despite these ambitious targets, caution is warranted, particularly as Bitcoin appears to be approaching an overheated zone on the MVRV ratio indicator.

At the time of writing, Bitcoin is trading at $98,550.

Bitcoin price chart from Tradingview.com
BTC price struggles to break $100,000 | Source: BTCUSD on Tradingview.com

Featured image created with Dall.E, chart from Tradingview.com



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