Bitcoin's emergence as a viable financial asset
In recent times, Bitcoin, the digital currency that has captured the world's attention, has been experiencing a downturn. For about two months, its price, as tracked on yahoo finance, has been trending downwards, losing nearly 30% from its peak of around 110,000 dollars. This setback, which began at the start of the year, already suggested that 110,000 dollars could have been a peak.
The current bear market in the stock market is a far cry from the days of 1000-percent gains that Bitcoin once witnessed. The dynamics of exponential growth in Bitcoin have slowed down and may have faded quickly. This bullish, optimistic variant suggests that the pattern of Bitcoin's price fluctuations could repeat with weaker fluctuations, and a new price target can be calculated by each person themselves.
However, it's important to note that the social consensus about Bitcoin's price trend can be influenced by various factors, and is not always rational. The personality known for having a plan regarding Bitcoin's future price based on the Stock-to-Flow theory is PlanB. PlanB suggests that there hasn't been a real bull market yet and therefore no bear market.
External factors, such as the general economic situation, trust in fiat currencies, demand for crisis-proof stores of value, and monetary policy of central banks, have become more relevant for Bitcoin's price in the stock market today. The normalization of Bitcoin as a financial instrument has begun, making it more related to these external factors.
If inflation occurs due to an increase in the money supply, it could have a positive impact on Bitcoin's price. On the other hand, if inflation is caused by tariffs, wars, natural disasters, or a decrease in the supply of goods and services, it could be challenging for Bitcoin, as for other stores of value and stocks.
The price of Bitcoin may increase step by step, linearly, not exponentially. This is a departure from its past behaviour, which was characterised by sudden, dramatic fluctuations. The logistic function is used to moderate Bitcoin's exponential growth, providing a more stable and predictable trajectory.
Bitcoin has become a (almost) normal financial product, with price fluctuations more like gold. This normalization process has implications for the future of Bitcoin, as it becomes increasingly integrated into the global financial system.
The "double top" formation on December 17 and January 21 is a sign of strong resistance and often signals a market turn. If inflation is caused by the 500 billion euro special fund from the incoming German government, it could have an inflationary effect, potentially impacting Bitcoin's price.
Currently, Bitcoin is in a bear market, as it has fallen by more than 20% without quickly recovering. This bear market is often characterized as a multi-year winter during which prices drop regardless of what happens. However, the optimistic variant suggests that this bear market could be shorter, with weaker fluctuations, and a new price target within reach for investors.
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