Institutional Investors Backing Bitcoin Are Confident It Will Bounce Back

Following last weekend’s plunge, the crypto market entered a downturn. As if that weren’t enough, the sentiment in the digital markets, particularly for Bitcoin and altcoins, remained bleak. The digital asset danced between $46,000 and $53,000 and further plummeted. The former being its support level, and the latter its point of resistance. It barely made it beyond $50000, just keeping its head above water, but the digital asset remains in the red due to the decline.

Crypto Market Recent Slump

The rest of the market is still in a slump, and the mood is not improving. Ethereum’s downward pressure was near $4000 on Thursday as a result of the “Arrow Glacier” update. In principle, this should not affect investors. On the other hand, Solana, Dogecoin, and Shiba Inu are the cryptocurrencies that have lost the most in the last week, with losses ranging from 15% to 20%. The overall market capitalization is $2.26 trillion.

Craig, an analyst at Oanda, believes that the downward pressure on Bitcoin’s price, which has driven it below $50,000, suggests an improbable situation. He believes that price movement will exacerbate the pessimism the digital asset presently contends with and that corrections are unlikely based on previous evidence on price fluctuations. Bitcoin devotees predict the digital asset will rebound like it did earlier this year. He believes the digital asset is gearing up for another major turnaround, similar to the one it experienced in May.

U.S. Dollar Rising Value Means Bad News For Bitcoin

On Thursday, the revived bear market accelerated as US equities plummeted and the dollar index (DXY), which measures the greenback’s value versus major fiat currencies, surged 0.28 percent. The reality is that as the US dollar strengthens, it drives Bitcoin prices to fall. Another CoinDesk article indicated that Bitcoin trade volumes on other exchanges had decreased.

Bitcoin long-term holders do not need to panic, as the digital asset may recover. However, short-term traders must contend with the market’s pessimistic mood. Bitcoin is projected to rally against the dollar’s pulls, which are gaining traction at the moment. Similarly, Bitcoin’s potential as a risk asset would outlast the pessimism surrounding the latest coronavirus type, Omicron.

A Massive Rebound In Sight

This circumstance has resulted in predictions of a new price rise where Bitcoin would set new price milestones later this year or in early 2022. Despite many oversold signs on the charts, buying activity in Bitcoin remains subdued. This diminishes the chance of a big price increase moving into January, especially given the weekly and monthly charts’ loss of upward momentum.

Numerous reports are urging caution. Natixis conducted a survey of 500 institutional investors in several countries. Among their responses were central banks and other wealth management firms. Their findings indicated a likely consolidation that will result in a “significant correction” in the following year as a result of further investments by the identified institutions in digital assets.