It’s been an action-packed week in the world of crypto. Bitcoin (BTC) and many altcoins continued to rise.
Now that BTC is past its historical accumulation level, its likelihood of reclaiming its position as the inflation hedge makes for an interesting debate.
The Biden administration acknowledged that the nation had technically entered a recession earlier this week, following the 75-basis point increase in Fed Reserve interest rates. The situation got worse after the GDP of the nation shrank for the second straight quarter. However, between July 26 and the time of writing, the cryptocurrency market recovered more than £102 billion.
The bullish cues in the broader market helped BTC. It went from the low of £15.5k to the high of £16.4k, and as of press time, it was trading at £16,000.
As of right now, BTC is expected to tick two important boxes. First reclaim the Fibonacci level at 23.6%, and then break free from the market bottom.
The Fibonacci level, from the lows to the April market high, places BTC’s next important stop at £21.3k. The slow ascent from the June lows allowed it to gain strength and achieve the current trading price.
This price point, which is critical for BTC as it holds the support needed for the rally to continue, sits just slightly above the 23.6% Fib line. The recent rise allowed BTC to emerge from the bottoms that it reaches when it is severely undervalued. This is a success for the asset after spending more than a month in the same place for the first time in 28 months.
The concern for BTC’s future arises as a result of this success since the coin and crypto market are not working independently. Given that this week’s gains in NASDAQ and S&P 500 indices were identical in magnitude, the correlation between BTC and stock indices is still rather high.
Because of this, despite its rebound, BTC is still unable to serve as an inflation hedge.