Markets have the wrong picture of rate hikes – Bitcoin remains in a downtrend

According to Dan Morehead, CEO of Pantera Capital, market participants are losing perspective when it comes to the possibility of a rate hike next month.

Dan Morehead – CEO Pantera capital

Multihead say The market is wrong as BTC and most cryptocurrencies fall amid the Federal Reserve’s (Fed) rate hike plans to combat persistent inflation.

“In this case, I strongly believe that the market is indeed doing something wrong. The rate hike (which I think will be pretty obvious and will continue to happen) isn’t too bad for cryptocurrencies. It is actually very good for crypto prices compared to other asset classes.”

According to the head of a crypto-focused hedge fund, digital assets are very different from other assets because they are not affected by rising interest rates.

“In the case of bonds, for example, prices naturally fall when interest rates rise. I think the bond will be destroyed. Most other things like stocks have cash flows that need to be discounted, meaning the price is lower when the yield is higher. The same applies to real estate and most other asset classes.

Blockchain is not cash flow oriented. It’s like gold. It can work very differently than interest-driven products. I think investors will have a choice: they have to invest in something, and when interest rates rise, blockchain will be the most attractive in relative terms.”

Morehead also said that the current correlation between traditional financial markets and cryptocurrencies will not last. Citing a picture of Bitcoin’s historical trend over the past 11 years, he predicted a recovery for the leading cryptocurrency.

Bitcoin deviate from the road 11-year trend | Source: Pantera Capital

“It shows where bitcoin stands as a proxy for the industry in the 11-year trend log. It is currently trading below 60% of the trend line…

I think the market will work again. It could be weeks or months before the price bounces back sharply. We are quite bullish on the market and think the prices are relatively cheap.”

According to Pantera, Bitcoin has only spent 12.7% of the time below the trend line during its lifetime.

The strategist who accurately predicted Bitcoin’s May 2021 crash is analyzing current price action to determine if the biggest digital asset is poised for another correction.

Analyst Dave the Wave says that bitcoin is currently trading within an ascending channel, which has allowed bitcoin to rally from a low of $33,000 to a 30-day high of $45,661.

According to the analyst, the ascending channel is currently tracking Bitcoin’s recovery after shedding more than 50% of its value from its all-time high above $69,000.

Dave the Wave further emphasized that Bitcoin needs to reclaim the $40,000 mark to maintain the channel.

Source: Dave the wave

At the time of writing, Bitcoin is trading at $38,525.

Looking to a higher timeframe, Dave the Wave confirms that Bitcoin is still in a downtrend and is on track to reach its target at $23,323.

“On the macro timeframe, the price is not yet out of danger…”

Source: Dave the wave

With Bitcoin currently trading below the $40,000 support, the strategist compares the current price action to BTC’s September 2018 market structure.

During this time, BTC bounced off the $6,000 support for the last time before bears reached the critical level and pushed Bitcoin down to $3,000.

“If I had to compare, I would say BTC is here…”

Source: Dave the wave

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