Bitcoin welcomes "reversion to the mean", investor sentiment is divided, rebound prospects are doubtful

Golden financial column 2023-01-24 17:01:11 阅读数:905

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The encryption market is not closed for the Spring Festival, and Bitcoin continues to maintain its positive momentum. After hitting the $23,000 level over the weekend (the first time since last August), BitcoinThe currency briefly broke through $23,100 on Monday, and fell back below $23,000 by the time of writing, a month-to-date increase of more than 35%.

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"mean reversion" effect

Bitcoin kicks off 2023 on a positive note, according to investment management firm BernsteinRegression to the mean (Reversion to the mean) sparked the recent surge in the cryptocurrency market on Monday.

Reversion to the mean is a concept in cryptocurrency investment, which refers to the trend of "returning" to the average level after large fluctuations in price or trading volume., It can also be simply summarized as the law of "the more you rise, the more you will fall, and the more you fall, you will rise".According to Bernstein market analysts Gautam Chhugani and Manas Agrawal, the recent surge in bitcoin prices can be attributed in part todue to this phenomenon.

All assets are affected by various unpredictable factors. Bernstein believes that the current surge in BTC prices is likely to be due to investors' further appreciation of the price after several months of relatively low prices.It is caused by the repurchase of BTC due to rising expectations.

Despite issues within the industry such as Genesis’ bankruptcy filing and FTX exchange implosion, the reportThe underlying excess liquidity in the cryptocurrency market has dissipated, as most of the expected selling pressure revolves around smaller, illiquid coins.

The investment bank emphasized that Bitcoin has never experienced two consecutive years of negative returns since its inception, and recommended cautious bearishness under current market conditions.However, analysts do not believe that a new strong rally has begun.

The analysts wrote in the note: "As we engage with multiple institutional players, we do believe that institutional capital will begin toPosition yourself in cryptocurrencies as they move to a more regulated asset class".However, analysts see little chance of the positive momentum continuing, with no signs of "any fresh capital allocation to sustain this rally".

Splitting investor sentiment

After a disastrous year for the crypto market, many investors are skeptical of token gains.

$37 million flowed into crypto investment products last week, according to data tracked by CoinShares asset management firm.However, 68% of them belonged to short bitcoin products.Crypto funds traded as much as $1.6 billion last week, above the 90-day average of $990 million, with 80% of transactions concentrated in bitcoin investment products.Bitcoin investment products had a total inflow of $5.7 million last week, while short Bitcoin investment products had a total inflow of $25.5 million, the largest weekly inflow since July 2022 ($51 million).Among them, American investors are the most skeptical, with 95% of funds in the United States flowing into short-selling Bitcoin products.The mood in the European region was upbeat, with German and Swiss crypto funds seeing inflows of $14 million and $10 million, respectively.

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B2C2 Chief Risk Officer Adam Farthing commented: "The bulls are weighing whether this momentum will lead us into a newThe cycle. Bitcoin’s $25,000 resistance level may be the key. It will be a tricky question, but the price above this level may cause more interest from the outside world to participate again.”

An analyst also warned that technical indicators suggest bitcoin's recent rally may be on the mend.

Yuya Hasegawa, crypto analyst at Japanese bitcoin exchange Bitbank, said that while bitcoin's trend indicators "show a strong uptrend in general," its relative strength indicator (RSI)) "It is diverging from the upward trend of prices and starting to decline, which is not a good sign for the current price trend."

The analyst wrote in the note: "Bitcoin may test its August high and find support at the $20,000-$21,000 level, but due to its RSIIt could get pretty shaky with the divergences coming up this week from several big tech earnings.”

Bitcoin BTC BTCUSDT Chart 2 Jarvis

Jarvis Labs analyst studied Bitcoin's 200-day moving average (MA), saying that Bitcoin reclaimed the 200-day MA at a price around $19,520. If BTC can holdAbove it, the rally may extend to higher levels, but this does not mean that Bitcoin will return to its all-time high of $69,000.Instead, it suggests that BTC’s market health is improving and the basis for further gains is strengthening."While the chances of a return to early January price levels sometime in 2023 remain fairly high, there is also plenty of data suggesting that any retest would provide an excellent buying opportunity," the analyst said.

Author: BitpushNews Mary Liu

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