The Bitcoin Opportunity May Be On
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Bitcoin has endured its fair share of punishment and volatility in the first eight months of 2022, but some market watchers believe the turmoil could give way to buying opportunities.
These opportunities may already exist, and if this assessment proves to be accurate, exchange-traded funds such as the VanEck Bitcoin Strategy ETFs (XBTF ) could benefit from it. Of course, bitcoin would be helped by a more optimistic macroeconomic outlook.
“A rising rate environment and possible economic slowdown is bad news for Bitcoin and other risky bets, like tech stocks, with which cryptos are widely correlated. Higher interest rates push bond yields higher, making the relative returns of risky assets like Bitcoin less attractive, and a recession should further reduce demand for these assets,” reports Jack Denton for Barron’s.
As an actively managed futures-based fund, XBTF is more influenced by bitcoin’s short-term price action, indicating that it could be an ideal avenue for investors looking to avoid some of the volatility that often accompanies digital currency over longer holding periods. long.
Adding to the short term case for XBTF there are some technical signs of improvement for bitcoin, including the cryptocurrency’s recent move above its 200-day moving average. Over the history of the asset, this has often been a reliable indicator of further benefits to come.
“Now, as Galaxy Research head Alex Thorn pointed out in a note on Monday, Bitcoin is trading below its 200-week moving average and its realized price, which is the average cost basis among holders. of crypto,” according to Barron’s. “Bitcoin has only traded below its 200-week moving average on a few occasions, the analyst noted, including the 2015 bear market, 2018/2019 bear market, Covid scare spike -19 in March 2020 and the period from June 2022 to August.
Although there are emerging signs that XBTF may be primed for a near-term upside, pragmatic investors may want to assess confirmation and wait before rushing in because, as is often the case with bitcoin, downside risk looms.
“The head of Galaxy Research sees support for Bitcoin on the downside around $17,700, and again at the 300-week moving average around $17,250. Thorn’s short to medium term upside targets are Bitcoin’s realized price above $21,650, the 60-day moving average of $22,000, and the cycle high range of $25,000,” Barron’s concludes.
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