Is the end of the bitcoin bear market in sight? You have to pay attention to this

The bitcoin price is currently being hit hard and the market seems to be in a complete state of panic. The big issue at the moment is, of course, where the bottom is. However, that question is difficult to answer. This is mainly due to the uncertain macroeconomic environment we currently find ourselves in. Global inflation is at its highest point in 40 years, forcing central banks to tighten monetary thumbscrews.

The Fear of the Federal Reserve

All eyes are currently on the US Federal Reserve, which controls the fate of the entire financial market. Their job is to control US inflation while also keeping the economy afloat. That is a balancing act that gets more difficult by the day. High inflation can only be tamed with a higher interest rate and a higher interest rate puts extra pressure on the economy.

A higher interest rate simply means that capital becomes more expensive and it costs companies more to raise capital. This can depress the profitability of companies to such an extent that they have to cut spending, causing job losses or even massive bankruptcy. That higher interest rate therefore has a depressing effect on the prices of financial assets and there is bitcoin no exception. In the end, everyone needs dollars to pay the bills.

The most important factor in determining when the end of the bear market is in sight seems to be the Federal Reserve. However, at the time of writing, the situation is still so bad that they are unlikely to deviate from their plans to raise interest rates sharply in the remainder of 2022. That has the potential to push bitcoin even further away.

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Already had a bottom?

It is of course also possible that we have already seen the bottom. Bitcoin has been hit so hard right now that most panic sellers have probably already made their decision. The only thing that could possibly put bitcoin in trouble is a drop below the psychological limit of USD 20,000. After all, that is the peak of the bull run of 2017. And below the peak of a previous bull run is not desirable. Especially if we will remain below this limit for a longer period of time.

If that happens, then the panic could be complete and we’ll probably hit the ultimate bottom. Its exact location is always a mystery. The bitcoin price remains an animal that depends on a thousand different factors that are difficult to predict. It is best to determine for yourself whether you still consider bitcoin a good investment and then trade on it.

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