Bitcoin is currently hovering around $22,400 as investors worry about Silvergate and await positive economic data from China. It is a situation with two faces and that uncertainty is currently mainly reflected in the price.
‘The low point is behind us’
According to most analysts, the market is currently on the edge of a cliff. The low point of the crypto winter is most likely behind us, but that does not alter the fact that Silvergate can throw a spanner in the works. Silvergate Bank is also seen within the industry as the bank of the crypto world.
If it collapses, it can sometimes cause problems for other parties, but it is mainly the next stain on the image of the industry.
On the other hand, there is currently also China, from which we currently expect positive economic data. This has everything to do with the reopening of the country, which is now rapidly dropping all COVID-19 restrictions.
This week there will be another batch of data from China with the trade balance, currency reserves and inflation. In that respect, macroeconomics will be a feast again this week.
Difficult period
However, there is no denying that bottom line is probably a tough period ahead for Bitcoin. The US interest rate in particular plays an important role in this as a leader in the market. Since the Federal Reserve is unable to bring inflation under control, interest rates are likely to remain at these high levels for a long time to come.
That in itself is a bad thing for Bitcoin, as these high interest rates make it attractive for many investors to exchange their risk assets for US government bonds. After all, you currently pick up a guaranteed return of around 5 percent.
On the other hand, the high interest rates will not disappear until inflation has finally dropped to 2.0 percent. If interest rates remain at this relatively high level for a long time, we cannot rule out a recession either. That would not be a good development for Bitcoin either.
