Experts named the reason for a Bitcoin's new all-time high
Grayscale Research speculates that Bitcoin could potentially touch its peak price once more within this year, contingent upon the U.S. avoiding an economic downturn.
This positive forecast arrives after a phase of recovery observed in cryptocurrency markets and the financial domain at large, which had experienced significant downturns between Friday, August 2, and Monday, August 5.
In a research note dated August 8, Grayscale’s analysts harbored a hopeful stance regarding the U.S. economy's prospects of achieving a "soft landing."
Moreover, Grayscale pointed out that potential shifts in the U.S. political scene concerning the cryptocurrency sector could mitigate risks to market valuations, offering a contrasting scenario to prior market trends.
The possibility of major financial setbacks appears to be limited, even amid an unstable economic climate, compared to previous occurrences. This perspective is supported by steady interest from newly introduced U.S. exchange-traded products and the lackluster performance of alternative cryptocurrencies.
Grayscale anticipates that the steadfastness of the market will be largely influenced by forthcoming economic indicators and the actions of central banking institutions. Crucial moments such as the Federal Reserve’s meeting in September and the Jackson Hole Symposium are tipped to significantly sway the market’s trajectory.
Despite the looming economic ambiguities, Grayscale Research upholds a buoyant view on Bitcoin’s potential as a long-term investment. The firm posits that an economic slump might, in fact, bolster Bitcoin’s appeal, notably amidst the current “unrestrained approach” toward monetary and fiscal governance.
The market downturn, triggered by a disappointing U.S. job report for July indicating a spike in unemployment typical of recessive periods, caused a swift turn in asset allocations, Grayscale reports. This change propelled a flight to safety, with assets like U.S. Treasury bonds and the Japanese Yen witnessing gains.
During this volatile period, both Bitcoin and Ethereum suffered losses, with BTC demonstrating a sturdier stance as ETH faced a steeper fall.
The pronounced drop in Ether’s value is attributed to the unwind of sizable long positions in perpetual futures, which had been amassed with expectations of the SEC green-lighting spot Ethereum ETFs by May 2024. The reduction of these positions during the market’s fall exaggerated Ether’s devaluation. Additionally, sell-offs by significant stakeholders such as Jump Crypto and Paradigm further pressured Ethereum’s pricing.
Ethereum is presently valued at $2,634.10, noting a 16.5% decrease over the past week. On the other hand, Bitcoin is making strides in its recovery, currently priced at $60,781, which marks a 5% reduction over the same timeframe, bouncing back from a Monday low that saw its value momentarily dip below $50,000.
