Why is Bitcoin still relatively stable after FTX and other bursts? A recent report by the team of Sheena Shah, a team of
, Morgan Stanley , analyzed the reasons.
She believes that the main reason is that Bitcoin’s price has plummeted since the beginning of this year, trading activity is surprisingly low, and 78% of Bitcoins have not been traded for 6 months, setting an all-time high. According to Morgan Stanley, this means that these bitcoins are “not sold in a bear market”, and one possible reason is that “anyone who bought/received bitcoins 1-1.5 years ago has an average break-even purchase price of about $45,000.
The team believes:
This also means that the "marginal" price of Bitcoin is determined by the less and less trading volume, which significantly reduces market liquidity and makes volatility increasingly greater.
Since the beginning of this year, Bitcoin has fallen by more than 65% this year
On the other hand, retail investors may just be more patient than institutions, and retail investors see that cryptocurrencies can soar every time as Fed relaxes monetary policy , holders are just waiting for the next inevitable quantitative easing policy of the Federal Reserve and the subsequent market. Panic.
As the number of retail investors peaked in the fourth quarter of 2021, current retail investors' trading has basically exited the market. Compared with 2017-2018, Morgan Stanley observed that institutions are now the main trader, while retail investors played a more important role at that time.
This means that cryptocurrencies have become the (extreme) of institutional trading central bank policy leverage bets: buy when loose, sell when tightening (and short ). In fact, as Morgan Stanley pointed out:
Bitcoin has experienced many bull markets and bear markets before. Since 2013, the rise in Bitcoin prices has been following the growth of fiat money supply, and its correlation with US stock market has also increased.
In addition, some observers believe that although many factors have prompted investors to stay away from risky assets, including high inflation, energy crisis in Europe , ongoing global supply chain bottlenecks, and even Bitcoin mining difficulties, long-term holders of Bitcoin seem to be more confident than ever before.
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