Bears Are Losing Ground

Bitcoin is up 41%, Ethereum 37%, and Hive 60% since the start of the year. It is debated whether the rises mentioned above are reaction buying or the beginning of a long-term trend. The truth is that bears' self-confidence is declining day by day.

It would be appropriate for those who intend to invest in cryptocurrencies to buy Bitcoin for 16k USD. 16K USD was at least a suitable level for incremental buying. The price of 24K USD is also suitable for gradual purchase. The long-term trend of crypto prices shows that current prices are about 50% off. Models pointing to the logarithmic increase in cryptocurrency prices are also compatible with the exponential nature of technology.

The main risk that bears predicted for 2023 was recession due to rising interest rates. Today, we cannot talk about a recession even in Europe, which is seen as a weak link. The hot winter and the savings measures have prevented a possible energy crisis. Although the US economy has slowed slightly, labor statistics remain strong. China has largely left the Covid effect behind.

In his press conference after the last FOMC meeting, Jerome Powell accepted the positive developments on the inflation front. Last month, natural gas and coal prices decreased by 36%. The Baltic Dry Cargo index, considered an indicator of transportation prices, has been reduced by half in the last month. In the service sector, prices continue to be strong. Even though inflation is still well above the 2% target of FED, everyone agrees that there is positive developments. Therefore, one more basis of the bears' thesis that new bottoms will be seen in the market has been eroded.

When we examine the price movements, we see that three important indices of US stocks are above the 200-day simple averages (SMA). A few months ago, the bears argued that it was temporary when the Dow Jones rose above its 200-day simple average. Last month, S&P also climbed above its 200-day average. Finally, the Nasdaq climbed above its 200-day average.

We first saw Ethereum rise above the 200-day SMA on the crypto side. Later, Bitcoin followed Ethereum. After all these developments, even the most determined pessimists did not claim that a new low would be seen in the crypto market. The discourse that the worst has not happened yet has left its place in the fact that prices may follow a horizontal course in 2023.

When evaluating the markets, it is necessary to consider the exponential development of technology. With the new millennium, technological growth has accelerated in an unprecedented way in history. Automation provides a rapid increase in productivity. Crypto's previous bull market has been modest due to the high inflation caused by Covid 19. The Hive rose only 15 times in the last bull market. Future bull markets will overshadow even 2017.

Meanwhile, Hive's 200-day average stands at 44 cents. If the Hive price crosses this level, we could witness a rapid rise toward the next resistance point, 60 cents.

Conclusion

The risks have remained despite the positive developments I have listed above. Fed Chairman Jerome Powell strongly emphasizes that inflation should fall to 2%. The published FED text stated that the interest rate could be increased more than once. On the other hand, the market was not convinced about two additional rate hikes.

The most important reason for the price increases in the last month is the decrease in uncertainty. Last summer, estimates of between three and eight percent were made about possible rate hikes by the Fed. Now, the differences of opinion on interest rate hikes have regressed to 50 basis points. Inflation is on a downtrend, and there are signs that the economic slowdown will moderate. Moreover, high-interest rates have created ample space for central banks to use in the fight against a possible recession.

It would be excessive even for an optimist like me to think that the positive mood in the market will continue uninterrupted. There will be price drops. But it seems unlikely that the bears will regain their self-confidence of last year.

Thank you for reading.

Cover Image Source: Midjourney App

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