Amidst the high volatility in cryptocurrencies, Daniel Mbudi, Head of Markets at Quantfury, explained in a recent interview the factors influencing the ecosystem and how Bitcoin (BTC) is anticipating a risk market downturn.
For Muvdi, the crypto market You may be expecting a so-called “period”. risk off, In other words, this is the phase when investors avoid risky assets.
According to the analyst, there is currently a lot of uncertainty in the market, and risks are becoming more and more hidden. In his opinion, there is too much optimism when it comes to artificial intelligence, which is creating a bubble, which is generating much of the bullish narrative.
“Given that a fracture can occur, what we call a risk-off occurs. What we are seeing is a risk exit coming into view. Now, what does this mean for Bitcoin? In my opinion, Bitcoin is serving as an early indicator of what this risk exit will look like.
“If there is a risk-off, that is, if you are trying to avoid risk, you can look for Bitcoin at lower amounts,” Mahbudi emphasized.
FED and interest rate uncertainty
As reported by CriptoNoticias, one of the factors that will put the most pressure on the market is the next US Federal Reserve meeting scheduled for December 10th. In light of this incident, Mvdi points out: Expectations about the likelihood of a rate cut have changed recently.the uncertainty increases:
There was a near-certain consensus that the Fed would cut rates, but 60% now believe they will not. The problem arises because the reduction was discounted on December 10th, but it is not done.
This change in expectations has a direct impact on the liquidity and selling pressure of cryptocurrencies, especially Bitcoin. Another important point highlighted by Muvdi is: Role of listed investment trusts (ETF) Bitcoin as a sales catalyst In the risk exit scenario:
I commented in my research that this is something of a double-edged sword, as ETFs sell strongly in risk-off scenarios. For example, in one day, $1 trillion flowed into BlackRock’s ETF, IBIT, and $3.5 trillion flowed out of the ETF. This will have a significant impact on sales to exchanges, increasing pressure on the market.
Experts say this phenomenon shows how traditional investment products can amplify the volatility of crypto assets in times of uncertainty. Mavdi said so too. External decisions such as the repatriation of Japanese capital could increase pressure on risk assets.
Similarly, analysts believe that Bitcoin has characteristics that could make it a safe haven in the future, but for now. It continues to behave like a high-risk asset.
I believe this asset has a good chance of being a safe-haven asset, but due to its rarity and other good candidates, it is not yet a safe-haven asset at any time. But in my opinion, it’s more experimental now. People still need such adoptions to achieve this balance, thus becoming a refuge in and of themselves.
