It should be noted that the situation with Bitcoin now really leaves much to be desired. Today, the cryptocurrency is worth less than $22,000, and in the last week its price has fallen by 8.4 percent.

Analysts also note a decline in the correlation between the BTC exchange rate and the Nasdaq 100 index. The figure stands at 34 percent, which is the lowest result since early 2022, when the Fed signaled its desire to raise the key interest rate.

As such, experts suggest that BTC and other cryptocurrencies are turning into assets that are highly sensitive to changes in the base rate. While this makes sense given that crypto is a risky asset class, investors are not happy about such collapses anyway.

What will happen to Bitcoin and other cryptocurrencies

Amundi chief investment officer Vincent Mortier and macroeconomist Tristan Perrier have published a report analysing the state and prospects of the cryptocurrency market. The authors of the paper argue that Bitcoin has failed to serve as a hedge against inflation over the past two years due to “a surge in interest rates and policy changes”, which has put pressure on “all asset classes”.

According to the article, interest rates will soon stop rising, or even fall, if inflation is high on average in developed countries. Such a situation would potentially lead to a bullish trend for Bitcoin. Here’s a relevant rejoinder from experts, cited by Cointelegraph.

This is a much more favourable environment for an asset with limited supply and longevity, as its main attraction is its future potential.


Note that while Bitcoin remains a crypto-asset with limited maximum supply, Etherium continues to be a deflationary asset. As of today, the total supply of ETH is down by more than 50,000 units compared to September 2022, when this blockchain switched to the Proof-of-Stake algorithm.

Ethers are eliminated as commissions, the level of which increases as the blockchain is stressed. Commissions have been quite high in the last month, causing the number of ethers to drop by almost 40,000 units. Accordingly, in terms of limited supply, ETH could be much more attractive to investors than Bitcoin.


Analysts also cited several reasons why the current crisis in the crypto industry should not be considered the “finish line” in cryptocurrency history.

Firstly, the numerous bankruptcies of cryptocurrency companies in the past year will lead to more realistic expectations from the industry and “separate the grains from the chaff”. In other words, only those projects and platforms that have something useful in them for cryptocurrency users will survive. Experts have compared crypto to the stocks of leading tech companies, which have also experienced unexpected collapses before large-scale bullruns. That is, they remain generally positive about decentralised assets.

Another argument: in terms of timing, the current bearish trend so far coincides with previous BTC decline cycles. In other words, the cryptocurrency still has time to form a new growth wave that would fit into the usual pace of the digital asset market’s transition from a bearish to a bullish trend.

The third important factor is the transition of Etherium to the Proof-of-Stake consensus algorithm last September. This event showed that the crypto industry can significantly reduce its power consumption, contrary to any criticism of “excessive resource consumption”.

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According to Cointelegraph’s sources, in the short term the market could experience a noticeable spike in volatility, meaning it could show significant rate changes. This is due to a sharp rise in a Bitcoin metric called Coin Days Destroyed (CDD) for Bitcoin.

As a reminder, CDD is an indicator of economic activity that gives more weight to coins that have not been spent for a long time. Each day that one coin remains unspent, one "coin day" is accumulated. When that coin is eventually spent, the number of accumulated "coin days" is reset to zero or destroyed, which is what the CDD metric records.

Historically, an increase in CDD often precedes an increase in Bitcoin volatility. The CDD metric has now risen to a high of the past two months. Will the chart see a noticeable rise or fall in the coming days? Experts believe there is no one hundred percent probability here.

Still, at least the data on BTC inflows and outflows on cryptocurrencies does not yet show record values, and it is the coins on exchanges that allow to conduct certain transactions and influence what is happening in the market.

That is, no one is massively withdrawing or transferring coins to exchanges to store or sell them. Moreover, during last day 5 thousands BTC or about 110 million dollars were withdrawn from exchangers.

There is one more curious factor. The day before there were 49 thousand BTCs worth about a billion dollars, belonging to the U.S. government. These are the coins, once confiscated from the now closed darknet platform Silk Road. 9,826 BTCs of these were transferred to Coinbase, leading investors to fear that a large sale of the coins may crash the market.

However, one billion dollars is not a big amount in the total volume of withdrawals and deposits on exchanges. In addition, the coin market already collapsed today, triggered by news that a cryptocurrency-friendly bank called Silvergate was shutting down. As a consequence of the event, Bitcoin, among other things, managed to slip into the $21.5 thousand zone.


Bitcoin does not seem to have lived up to its title of digital gold in recent months, which in addition is supposed to save investors from inflation and other economic problems. However, the cryptocurrency market now continues to be within a bearish trend, so the poor price performance is not unexpected. Here we can only hope for a new bull run, which will restore people's faith in digital assets and their ability to grow in value.


In any case, stay tuned to our millionaire cryptochat. There, we’ll talk about other important topics that affect the decentralised asset world as well.

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