Key Ingredients Required for Bitcoin

According to industry participants, an improvement in macroeconomic variables, a certain trading pattern, and a further shakeout of companies and projects could be the critical components required for bitcoin and the larger crypto market to bottom.

Macroeconomic Stability

Bitcoin has dropped more than 70% from its all-time high in November, wiping out about $2 trillion from the total value of the cryptocurrency industry.

Bitcoin has been trading in a tight range between $19,000 and $22,000 for the last two weeks, with no substantial stimulus to the upside. The macroeconomic condition of growing inflation has caused the United States Federal Reserve and other central banks to raise interest rates. This caused risk assets such as stocks to suffer. Hence, BTC also suffered.

Strong Stock Market

Cryptocurrencies have some association with stock markets in the United States and have declined in tandem with stocks. There are also concerns about a recession, although an improving macroeconomic picture may assist the crypto market in finding a bottom.

Meanwhile, according to James Butterfill, head of research at CoinShares, a “softer” Fed and a peak in US dollar strength might help the market find a bottom. A poorer economic outlook could cause the Fed to ease off on its tightening policy.

For starters, lending sites have high payouts to individual investors in exchange for depositing their cryptocurrency. Celsius is one of these companies which had to halt withdrawals last month due to a liquidity difficulty.

It is due to Celsius lending this crypto from its depositors to others willing to pay a high yield and pocketing the proceeds. This profit then should cover the yield Celsius provides to its retail clients. Three Arrows Capital, or 3AC, a crypto-focused hedge fund noted for its bullish wagers on the market, is another company that shows the issue of undue leverage.