Bitcoin has rallied strongly this year, but I will explain why it is not yet a new bull market.
BTC – Weekly Chart
The price of Bitcoin was oversold in 2022 with the collapse of FTX and Terra. That coincided with a US central bank hiking rates, which sucked money from decentralised lending.
Despite the move this year, BTC is only testing the 38% Fibonacci level from the highs. The 50% level is at $42500. Even $48,800 can still be seen as a pullback.
Analysts are bullish about the BlackRock exchange-traded fund and the BTC halving in 2024, but these events have failed. Ethereum’s Merge was a prime example that led to nothing.
Investors can trade Bitcoin for speculation but should see that central banks are working on digital versions of their currencies. BTC will not be adopted as a world currency and lives on hype. Alternative cryptos, known as altcoins, are a better investing option. Investors should look to projects that produce utility in a digital currency world controlled by governments.
The European Central Bank was the latest to announce a digital currency and is launching a test over the next two years. After some prototype runs, the move will begin real-world experimentation of a digital euro.
China has been an early tester of the digital yuan. At the same time, the Bank of England and US Treasury have voiced their support for digital money. Those who believe the world will run on Bitcoin will be wrong, but there is still room for trading.
