Despite the massive loss of confidence in cryptocurrencies after the fall of FTX, data on chain gives hope to Bitcoin investors. Crypto investor and skeptic Mark Mobius sees BTC falling back to pre-bull levels.
Bitcoin: “Here to Stay”
A bitcoin crash to $10,000 would mean another 40 percent drop from the current price. Fund manager Mark Mobius sees the main currency Bitcoin at this level in the coming year, in a “dangerous” crypto market. The co-founder of Mobius Capital Partners LLP is anything but a crypto enthusiast.
In an interview in Singapore earlier this week, Mobius said he would not invest his or his clients’ money in cryptocurrencies. But he also said that the digital asset sector is here to stay.
Overall, Mobius still sees “room for improvement” in the cryptocurrency journey because there is a sufficient amount of investors who believe in the cause. The partner of Mobius Capital had already predicted a price crash to 20,000 US dollars for this year and he was right. However, he said it’s amazing how the bitcoin price managed to hold up despite the impact of the FTX crash.
The investor, who has worked with Franklin Templeton Investments for years, announced his argument against the current price rise of Bitcoin by saying that the cryptocurrency was burdened by rising interest rates and the tighter monetary policy of the US Federal Reserve .
Mobius’ full interview is available on CNBC.
Higher interest rates create higher-yielding investment options and make holding bitcoin unattractive, Mobius said. Many see a direct link between an increasing money supply and the boom in the crypto markets. The Fed’s “loose monetary policy” is recognized as a driver of the crypto boom.
Leaving aside the fact that the money Mobius invests for himself and his customers comes from the same “banknote press”, he is right on one point: cryptocurrencies, including tech stocks by the way, have benefited in particular from low interest rates. If interest rates rise, other forms of investment become more attractive again.As Mobius mentions in the same interview, there were some offers with 5 percent or more interest on crypto deposits, but many of the providers of such interest rates have also gone bankrupt after the FTX crash.
Many companies offered very high interest rates to investors just to park their cryptocurrencies holdings with them. The providers then lent those cryptocurrencies to other customers and the interest income from this was shared with the depositors. That was exactly the business model of Celsius and BlockFi. But as cryptocurrency prices fell in tandem, liquidity and business models for many declined.
Of course, Mobiu’s statements are to be classified according to his generally negative attitude towards cryptocurrencies. But the man was right when he predicted that BTC would fall to $20,000 or below and then succeed.
However, BTC has not reached the predicted $10,000 mark this year. The low price is $15,480 and the current price is just under $17,000. Although the key support levels of $18,000 and $17,000 have been broken, the lead currency is still far from $10,000.
On-chain data shows that long-term holders of Bitcoin are setting the floor
Despite the massive loss of confidence in cryptocurrencies after the FTX bankruptcy, data on chain gives hope to Bitcoin investors. Analysis of the Will Clemente chain, among others, confirms these hopes.
As the analyst points out, it is enough to look at the sites of long-term holders of Bitcoin. The number of bitcoin holders hit is higher than ever, according to the data on the chain, and the profitability of the asset is at a low.
According to Clemente, long-term holders are buying into the bear market in a big way. Buyers, not sellers, are laying the bottom for Bitcoin, the analyst said in an interview with Cointelegraph. As Clemente explains, long-term holders allocate portions of their holdings to new entrants in the bull market.
By dividing this value by the supply spread, we get the average cost base of the entire Bitcoin network; currently sitting at ~$20K. pic.twitter.com/PcVmvo3thB
— Will Clemente (@WClementeIII) December 4, 2022
After the fall of FTX, it has been noted that crypto investors are turning away from centralized exchanges and towards self-regulating exchanges. Clemente’s analysis confirms this and also shows that the number of companies with an average of 0.1 to 1 BTC is increasing. In his opinion, it is positive that the average crypto user is increasingly turning away from exchanges and managing their own coins.
According to Clemente’s analysis, this is reflected not only in the increased outflow of capital from exchanges to the self-managed wallets of average investors, but also in the increased proportion of BTC supply held by companies with holdings between 0.1 and 1 BTC.
Combining the metrics gives a picture of the coins flowing from the major exchanges into a depository wallet for the average citizen, according to Clementes. A positive picture, as the analyst emphasizes.
Some analysts see Bitcoin falling back to pre-bull levels
The decline of Sam Bankman-Frieds FTX and Alameda Research as affiliates is having a major impact on the digital asset market. There is great concern, and in some cases fear, that more crypto companies may be “infected” and collapse.
In line with the negative sentiment and depressed market environment, Deribit’s option data also shows a high number of open bitcoin contracts. The so-called open interests have an exercise price of 10,000 US dollars, with an expiration date this month. The accumulation of these option bets on derivative cryptocurrency, Bitcoin, shows that some investors believe that the $10,000 level could be tested later this year.
Options data showing BTC drawn contracts combined with data on a mixed picture chain. However, the crypto market, especially the main currency Bitcoin, has already seen lows, including the $ 10,000 mark. That’s in 2020, before the bull reaches nearly $69,000.
However, the current situation is only comparable to 2020 to a limited extent. The effects of the FTX bankruptcy are too great to accurately forecast in an already volatile market. But long-term holders of Bitcoin are a real force. The question is how many of them will actually buy into the bear market at $10,000.