Cryptocurrency markets have been in disarray for the past two months, with no clear direction being visible. Bitcoin recorded a slight increase during today's trading session, but overall it has not been able to break the sideways trend. This trend was caused by a decline in Implied Volatility (IV), meaning that the nascent industry has yet to come out of an 8-week confusion phase. However, there is currently an air of optimism in the crypto world, as the U.S. Federal Reserve continues to inject vast amounts of liquidity into the financial system. This could give Bitcoin and other cryptos a much-needed boost and hopefully, lead to a break from the sideways trend.

Two major events, the banking crisis and the required federal government interventions to prevent the U.S. from defaulting on its debt, could have a positive effect on the Bitcoin market. The Fed’s increasing balance sheet size has already mimicked the levels seen during the 2020 COVID-19 crisis, which many traders believe led to Bitcoin’s incredible price action that year. With the analog between BTC’s price movement in 2020 and 2022 currently lining up, the suggestion is that BTC could soon start to display a similarly strong appreciation. To further this optimism, the VIX index is showing levels last seen during the bearish run in early 2022, which could cause an aggressive move in the coming weeks. For now, traders and investors continue to watch the crypto market with anticipation.



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