Bitcoin has been in a lackluster trading range of around $27,000 for almost two weeks, as the ongoing debt-ceiling negotiations have caused uncertainty and apprehension in the crypto markets. The stalemate between the U.S. President and House leadership has served to remind crypto investors how closely intertwined digital assets are becoming with macroeconomic affairs.
Tensions with IMF May Contribute to Increased Crypto Interest
Macro events have increased the appeal of cryptocurrencies like Bitcoin as inflation hedges and alternative financial assets. As investors in less stable countries, particularly emerging market economies, look to keep their capital safe from currency volatility or government control, crypto assets have become an increasingly attractive prospect.
This shift was highlighted last week when Pakistan made the announcement that “cryptocurrencies will never be legalized”. This decision was said to be part of a strategy of avoiding financial tech watchdog FATF penalties. FATF’s president recently wrote a letter urging countries to regulate instead of banning cryptocurrencies. Reports indicate that tensions between Pakistan and the IMF may be contributing to the increased interest in Bitcoin options.
Crypto Developments Across Various Economies
Crypto developments are not exclusive to emerging markets; they have a global impact and are seen across various economies. Market makers Jump Trading and Jane Street is reportedly withdrawing from crypto trading in the US, leading to concerns about liquidity, as well as allowing specific narratives to take hold in the crypto market. Rising Bitcoin options on Bybit indicate growing concern about the macroeconomic situation among investors.
The coin also has a strong appeal for countries with stringent cryptocurrency regulations. India seeks to impose a total ban on private cryptocurrencies, while exchanges have already shut down operations in the country. Amid restrictions and inflation risks, investors seek refuge in Bitcoin to safeguard against devaluation and lending limitations. They are also exploring decentralized solutions like the Lightning Network, where they can access funds outside of government control.
Public’s Growing Acceptance and Interest in Crypto
In the near future, the upcoming Bitcoin halving event in April 2021 could certainly boost the price of the asset. Previous halving cycles have often led to a rise in Bitcoin’s price, introducing a bullish sentiment into the market. This could provide a great opportunity for those in emerging markets to make a profit.
While there’s still a lot of uncertainty on the macroeconomic side of things, the public’s growing acceptance and interest in cryptocurrencies have placed Bitcoin and other crypto assets in a better position than ever before. Emerging markets turn to digital assets for hedge, Bitcoin halving may boost prices, ideal time for crypto investment.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.