In his latest appearance on Monday, Federal Reserve Chair Powell expressed concerning comments about the unsustainable path of the U.S. government debt during a television interview.
Powell stated that the United States is on an “unsustainable path,” and that debt will outpace economic growth. He believes that investors will soon doubt the government’s ability to repay its debts, leading them to move away from the U.S. dollar in favour of hedging. He mentioned that in such a shift of events, Bitcoin would be considered the top candidate for this hedge.
However, I believe that buying on dips is the prevailing tactic in the cryptocurrency market.
After its market capitalization increased by 1.8% in seven days to $1.65 trillion, recent attempts to sell after a period of stability were met with an increase in buying. Bitcoin remains near the $43,000 level.
At the beginning of the week, there was an attempt to sell as prices dropped amid weakness in the Chinese markets. However, prices quickly rebounded twice from the lows to $42,200, indicating strong support that significantly weakened the downward momentum, quickly bringing the price back to the $43,000 range, the average exchange rate since early December.
Near it is the 50-day moving average, suggesting that the market is still indecisive about the currency’s main direction.
This comes at a time when the dollar index and stocks rose simultaneously, coinciding with a decrease in risk appetite in the markets.
I believe that unique driving factors in the cryptocurrency market, such as Bitcoin exchange-traded funds (ETFs), have played a fundamental role in price fluctuations, forcing investors to wait for clear signals of price direction.
From my perspective, selling pressure on Bitcoin may ease after Powell’s statements yesterday, as overall economic factors support the growth of the world’s largest cryptocurrency.
However, technical factors supporting Bitcoin’s decline have started to weaken in the short and medium term.
Therefore, Ethereum’s price could rise to $3,500-$4,000 in the next three to six months. The upcoming network upgrade and the potential launch of ETFs on the second-largest cryptocurrency could contribute to price increases in the short and medium term.
It’s worth mentioning that the troubled cryptocurrency platform “Celsius” began repaying $3 billion in debts to creditors this week under an approved restructuring plan.
This will boost confidence and credibility in the cryptocurrency market in the medium term. All factors support the rise of Bitcoin, but I don’t believe this increase will happen before the expected event of the anticipated fork in March.
