Bitcoin is in a bear market, but there are plenty of good reasons to keep investing
Increased volatility, stock offerings and resistance to regulatory penalties are just a few of the reasons investors should keep an eye on BTC.
Market analysis
Let's rewind the tape to the end of 2021, when Bitcoin (BTC) was trading near $47,000, which at the time was 32% below the all-time high. During this period, the tech-heavy Nasdaq stock index held 15,650 points, just 3% below its all-time high.
Comparing Nasdaq's 75% gain between 2021 and 2022 to Bitcoin's 544% positive movement, one would assume that a possible correction caused by macroeconomic tensions or a major crisis would have a disproportionate impact on Bitcoin's price compared to stocks.
Eventually, these "macroeconomic stresses and crises" occurred and the price of Bitcoin fell another 57% to $20,250. This should come as no surprise given that the Nasdaq is down 24.4% as of September 2. Investors should also consider that the index's historical 120-day volatility is 40% annualized, compared to Bitcoin's 72%, or about 80% higher. .
This is the main reason why investors should reevaluate investing in Bitcoin. The potential risk-reward after the downside adjustment to risky assets perhaps leaves more room for cryptocurrency given three factors: higher volatility during a moderate rally, equity offerings and resistance to regulatory sanctions.
The problem is that the market is now in an extended downtrend and there are no signs of a quick recovery as double-digit inflation in many countries continues to put pressure on central banks for them to maintain a stricter position. Notice below how Bitcoin and the Nasdaq have struggled throughout 2022.
Nasdaq Composite Index (blue) vs Bitcoin ( orange). Source: TradingViewThe consequence of raising interest rates and removing debt asset stabilization programs is a recession-like environment. Whether or...
Increased volatility, stock offerings and resistance to regulatory penalties are just a few of the reasons investors should keep an eye on BTC.
Market analysis
Let's rewind the tape to the end of 2021, when Bitcoin (BTC) was trading near $47,000, which at the time was 32% below the all-time high. During this period, the tech-heavy Nasdaq stock index held 15,650 points, just 3% below its all-time high.
Comparing Nasdaq's 75% gain between 2021 and 2022 to Bitcoin's 544% positive movement, one would assume that a possible correction caused by macroeconomic tensions or a major crisis would have a disproportionate impact on Bitcoin's price compared to stocks.
Eventually, these "macroeconomic stresses and crises" occurred and the price of Bitcoin fell another 57% to $20,250. This should come as no surprise given that the Nasdaq is down 24.4% as of September 2. Investors should also consider that the index's historical 120-day volatility is 40% annualized, compared to Bitcoin's 72%, or about 80% higher. .
This is the main reason why investors should reevaluate investing in Bitcoin. The potential risk-reward after the downside adjustment to risky assets perhaps leaves more room for cryptocurrency given three factors: higher volatility during a moderate rally, equity offerings and resistance to regulatory sanctions.
The problem is that the market is now in an extended downtrend and there are no signs of a quick recovery as double-digit inflation in many countries continues to put pressure on central banks for them to maintain a stricter position. Notice below how Bitcoin and the Nasdaq have struggled throughout 2022.
Nasdaq Composite Index (blue) vs Bitcoin ( orange). Source: TradingViewThe consequence of raising interest rates and removing debt asset stabilization programs is a recession-like environment. Whether or...
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