Bitcoin had a challenging run over the past few months, with prices stagnating or falling and the difficulties that followed in the aftermath of the SEC decision to postpone the official ruling on Bitcoin ETFs. Short-term holders have recorded massive losses, and the current Bitcoin price shows signs of the latest decisions taken by the Federal Reserve regarding interest rates and inflation.
The environment has been somewhat difficult for investors lately, with many bumps in the road. Although the crypto ecosystem is traditionally recognized as being more volatile and changeable, it has been more demanding to navigate recently, owing to the many changes and variations. In order to create a sound strategy, investors must be knowledgeable about all the differences that have intervened within the marketplace recently and how they might affect the price point.
BTC miner stake
The Tether stablecoin has recently invested in a Germany-based crypto miner as part of a move backing the intervention of AI initiatives. There were reports that the yet undisclosed amount paid was somewhere around $420 million, but the company has denied these claims. Tether is the largest stablecoin by market capitalization, at over $83 billion.
So far, USDT said that this investment is separate from the rest of its reserves and that customer funds won’t be impacted in any way. A press release from the German company states that all the money will go toward purchasing hardware within the AI sector. The transaction will be complete in Q4 2023, at the end of which the firm will have purchased 10,000 NVIDIA H100 Tensor Core GPUs for a total cost of roughly 400 million euros.
African fintech
The Africa Money and DeFi Summit is set to take place in Accra, Ghana, between the 3rd and the 4th of October. It will gather industry leaders from all across the continent’s fintech and crypto sectors. International guests will participate as well, with discussions set to focus on Web3, cybersecurity, startups, industry stakeholders, decentralization, ReFi and, of course, crypto.
Despite the constant growth and development of financial technology on the continent, there’s also an increasing incidence of startups that raised massive amounts of capital, only to fail later on. The devaluation of local fiat money has also caused many people to store wealth in other currencies, making stablecoins and decentralized finance increasingly popular among African markets and consumers.
Many currently believe that favorable regulatory measures will appear in the near future since the authorities understand that there’s no way to ban cryptocurrencies because people will use and trade them anyway.
The Fed
On Thursday, September 21st, the Federal Reserve communicated its decision not to hike the interest rate again and to keep the conditions tight in the financial sector. However, the interest rates will remain high, and there will likely be another hike until December 2023, for which investors should be prepared. As a result, the Bitcoin price went down by 1.5% over a period of just twenty-four hours. All other positive news that intervened within this time frame was insufficient to steer the price point in a different direction.
The altcoins have been dealing with a rough time as a result as well. Ethereum went below $1,600, recording a new low level based on numbers from the past fourteen months. ETH went down by nearly 2%, while other cryptocurrencies declined by as much as 5%, recording more sizable losses.
Mt. Gox
Mt. Gox was a Bitcoin exchange based in the Shibuya ward in Tokyo. Shibuya is Japan’s financial and commercial center and is home to two of the busiest railways in the world, the Shinjuku and the Shibuya. Mt. Gox launched in 2010 and by 2014 was already handling a whopping 70% of worldwide Bitcoin transactions. However, it abruptly ceased operations amid allegations concerning either the theft or the loss of hundreds of thousands of Bitcoins, amounting to hundreds of millions of dollars.
On September 21st, the former exchange was said to consider a repayment delay, which was said to be the catalyst behind a sudden pricing bounce for Bitcoin, before the announcements from the Federal Reserve. The payment delay has been delayed by an entire year and is now set to take place on October 31st, 2024.
When a hack targeted the exchange in 2014, almost 900,000 BTC were extracted. The implicated creditors have been awaiting closure for nearly a decade after only about 20% of the stolen tokens were recuperated by the exchange. Analysts are confident that the impact of the repayment will be considerable and will affect the Bitcoin price simply because of the sizable number that will enter the market. However, it won’t be enough to cause any kind of destabilization.
Bullish catalysts
The chief reason why the Bitcoin market is not picking up speed and finally starting to climb is because there’s a complete lack of bullish catalysts. Much of the bulls’ strategy relied on the decisions surrounding the ETFs, but that is unfortunately still months away. There is also considerable trouble in the macroeconomics area, and the unfavorable positions leave Bitcoin, and investors forced to deal with the situation as it is.
The Federal Reserve raised the interest-rate target for the end of 2024 to 5.1% from the previous 4.6%. This signals diminished liquidity-enhancing rate cuts for the following year. The acknowledgment of inflation caused polarizing reactions from the crypto community. While some believed the lawmakers were wary of declaring any victory against inflation, others focused on the fact that the movements meant that investors might at last get more exposure to risk assets. However, optimism remains elusive.
The bottom line
Although the cryptocurrency environment has been making gradual steps towards recovery, it is still struggling in the aftermath of the crypto winter of 2022. Equity sell-offs might cause the Bitcoin price to plummet even further, and no bullish initiative might intervene in the foreseeable future. If there is any rise in the price points, it will be because of the increasing engagement and interaction with cryptocurrencies at the corporate level.
Investors must be cautious and attentive when buying or selling, as holding on to assets seems like the best option right now.