Month: November 2022

Despite the implosion of FTX, there is still hope for crypto. Fundstrat’s Tom Lee says Bitcoin continues making sense for some investors.

CNBC interviewed Lee in a Friday interview. He compared this year’s bear market in virtual currencies to 2017-2018, which saw them rebound in the years that followed. Two reasons he remained bullish on a wobbly cryptocurrency sector are that the FTX blowout can be beneficial in that it flushes out bad actors and history has shown bitcoin to have delivered good returns.

“It’s a crucial moment for the industry. It is removing a lot and purging a lot bad players, I believe. But does that mean crypto is dead? Lee stated that crypto is not dead.

He said that the strong crypto companies that emerge after FTX’s fall will be like the ones that survived 2008’s financial crisis, such as JP Morgan. Lee stated that the mistake was to believe that crypto could not be touched.

FTX filed recently for Chapter 11 bankruptcy, claiming that its CEO Sam BankmanFried had resigned. It was triggered by a severe liquidity crisis and rocked crypto markets.

Lee says that there are still many cryptocurrency companies with strong balance sheets, particularly those who have built their businesses around bitcoin.

He acknowledged that the crypto industry is under pressure and said it has been a “terrible year”. The Federal Reserve is aggressively raising interest rates to combat inflation, causing such damage to the digital-asset sector. This led to a crypto crash in early 2018, as investors lost interest in high-risk assets.

“It’s been an awful year for crypto. Lee stated that no one has made any money in crypto by 2022. He said that this is no reason to lose faith in bitcoin and that he still recommends clients to purchase the token.

“We read about bitcoin for the first time in 2017. We recommended that people invest 1% of their money into bitcoin at that time. Bitcoin was less than $1,000. Lee stated that this holding would represent 40% of their portfolio today, without rebalancing.

Bitcoin dropped 2.11% Monday at the last check, to trade at around $16,200, according to CoinMarketCap.

“So, bitcoin still makes sense for someone who wants some kind of ballast?” He agreed.

The important Fed FOMC meeting in November 2022, which decides the interest rate, is fast approaching. Bitcoin derivatives offer some valuable insights. The meeting is expected to result in a 0.75% increase in interest rates, followed by a 0.50% increase in December. It remains to be seen what Bitcoin’s (BTC) prices will do in this setting. BTC traded in sideways on Wednesday as a sign of potential bullish momentum.

Bitcoin FOMC Decision – The Derivatives

Bitcoin whales are involved in the inflow of assets to exchanges as the market prepares for Fed announcement. According to on Chain Data from Crypto Quant the open interest in the derivatives market has declined in recent years. This pattern coincided with Bitcoin hitting a monthly high of approximately $21,000. Both Bitcoin and Ethereum are under high selling pressure ahead of the FOMC meeting.

“As bitcoin prices rise, open interest in the derivatives market has fallen, signaling that traders are closing their long bets.”

In the meantime, large volumes of stablecoins flow into exchanges. This could indicate that BTC’s long-term prospects are good. According to price tracking platform CoinMarketCap, BTC’s price is currently at $20,481, an increase of 0.31% over the past 24 hours. The Ethereum price is at $1,567. This is a drop of 0.29% over the past 24 hours.

U.S.-based traders continue to accumulate BTC

In recent years, it has been found that U.S. crypto traders have continued to buy Bitcoin. Despite many headwinds, traders in the U.S. have accumulated Bitcoin more than any other country since July 2018. The main interest in Bitcoin has been from U.S. traders since July 28, 2022.

This means that BTC prices could move in any direction after the Fed rate announcement. There have been instances in the past when BTC prices dropped a little before an announcement was made. This was followed by sharp increases in all cryptocurrencies.