VYSYN Ventures Weekly Insights #69 — Bitcoin targets new ATH after overcoming recent doldrums
Last week, we detailed Bitcoin’s impressive short-term rebound following Chinese regulatory action. That recovery continued this week and reverberated across the entire cryptocurrency market as the combined valuation of crypto assets surpassed $2.4 trillion.
The price movements of the past week suggest much stronger momentum to the upside. Bullish fever is returning and everyone is considering the prospects of a return to all-time highs.
In the latest VYSYN Release, we look at how Bitcoin and cryptocurrencies quickly bounced back from the dips caused by the recent Chinese crackdown. We consider some of the driving factors behind this recovery and what this tells us about overall investor sentiment.
Fast recovery indicates waning Chinese Bitcoin influence
Following the regulatory announcement and crackdown in China last week, Bitcoin dropped from $45,000 to below $41,000, in a matter of a few hours. Other cryptocurrencies were also affected, with Ethereum leading the fall, dropping from $3,433 to $2,650. Cardano and Polkadot fell from $2.37 to $1.91 and $33.4 to $26.1 respectively.
These drops did not last long, surprising many market observers. Historically, Chinese regulatory developments catalyzed significant and prolonged drops in prices. This was not the case, as Bitcoin recovered its losses within seven days and continued to rise. As of writing, Bitcoin has broken above $50K, rising as high as $56k.
This recovery may suggest a shift in the underlying factors that could be fundamental to the value of crypto assets moving forward. The influence of China on the cryptocurrency market appears to have significantly diminished. It isn’t just prices that indicate this new reality. Bitcoin hashrate, which was hugely influenced by Chinese activities, has strongly recovered since the crackdown in China. Bitcoin has posted six consecutive upward difficulty adjustments since miners began shutting down in China. This highlights that rigs are returning online after migrating out of China, further decentralizing and improving the value proposition of the Bitcoin network. A more decentralized hashrate for Bitcoin improves its price prospects moving forward, and strengthens the core properties of the network.
Market recovery goes beyond Bitcoin
Bitcoin is not the only cryptocurrency to post a significant recovery from the recent dip. Tezos (XTZ) has achieved a new ATH. Its current ATH at the time of writing is $9.14 which was achieved on October 4, 2021.
Tezos’ latest upgrade in August 2021, involving a reduction in the time used in producing new blocks and gas consumption, seems to have increased user adoption and has fueled the price rises to new highs. The Dogecoin look-alike, Shiba-Inu is another cryptocurrency that has shown extraordinary results in the past week. The meme coin which was launched just before the entire market took a tumble in May 2021.
A segment of the crypto market attributes this bullish run to Elon Musk who tweeted a photo of Floki recently. Alternatively, reports have shown that an anonymous whale has been buying the meme coin, registering 6 trillion SHIB and 276 billion SHIB in two separate transactions. The Dogecoin rival climbed above the $0.00002 level for the first time since the middle of May 2021.
Regulators reassure crypto markets
Investor confidence has returned to the markets, and bullish sentiment is high. Recent comments by Jerome Powell, the Chair of the United States Federal Reserve, calmed investors in the cryptocurrency market. In a hearing held by the House Committee on Financial Services, Powell clarified that the United States has no plans to ban cryptocurrencies. However, he stated that there was a need to place some form of regulation around stablecoins which he likened to money-market funds.
Even technical indicators predict a bullish run at this time of the year. Institutional inflows, the 20-week EMA fractal, and the bull pennant breakout have all aligned to support a rise in Bitcoin prices soon. Such is the confidence of investors that the predictions of new Bitcoin ATH have resurfaced, with a few bulls predicting a breach of the $100,00 barrier by the end of the year.
About VYSYN Ventures
VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown to USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocations, versatile marketing support, and tech assistance.