Cryptocurrencies. Bitcoin more expensive, but probably not for long

  • Bitcoin and Ethereum, like the New York Stock Exchange, have received well the monetary policy direction announced by the Fed
  • However, the high prices of major cryptocurrencies may not be sustained
  • Warren Buffett once again criticizes bitcoin for ‘creating no real value’
  • Robinhood – an intermediary investment platform in cryptocurrency trading – has financial problems

Cryptocurrency investors saw Fed Chairman Jerome Powell’s statement on the expected cycle of 50 basis point interest rate hikes and the unlikely 75 basis point increase as promising. Today, bitcoin costs around $39,500. However, a good trend in the quotation of the most popular digital currency in the world is in doubt. Technical analysts believe that until the buyers sustainably break through the resistance zone in the $39,573-$40,000 range, and hence $42,000, the downward pressure should persist.

Ethereum, the second “coin” in the global ranking, also rose after the Fed’s decision to raise interest rates and begin quantitative tightening (QT). Even on May 3, “ether” was still below $2,700, and now it is over $2,900. However, as eToro analysts point out, the outlook for crypto assets is uncertain. The turmoil in this market appears to follow other assets, with investors moving away from riskier instruments, such as tech stocks, over the long term.

April’s “coin” quotes have become a wake-up call. The past month has been a slowdown for most major cryptocurrencies. Bitcoin and Ethereum lost around a dozen percent, while some tokens dropped as much as 30-40 percent. values. Meanwhile, in the past, the start of the second quarter was usually very good for virtual currencies. Breaking out of this seasonal trend made April this year one of the worst in bitcoin’s more than 10-year history.

Popular cryptocurrency analyst Nicholas Merten has mapped the “worst-case scenarios” for bitcoin and ethereum these days. His technical analysis shows that the last low on the bitcoin chart may be at $30,000 and on the ethereum chart at $2,000.

Merten points out that the combined capitalization of the two major cryptocurrencies never returned to the average level of the previous bull market. At the same time, he reassures investors that a Bitcoin price drop to $10,000 or $20,000 is now “completely out of the question.”

However, there isn’t a week in the cryptocurrency market where there aren’t optimistic forecasts alongside bad forecasts. Mike McGlone, analyst at Bloomberg Intelligence, citing volatility indicators, said that in the long term, bitcoin could rise and then stabilize at 100 times the price of an ounce of gold, which would now be worth $180,000. “Gold’s status as a store of value will face more competition,” he said.

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Warren Buffett – billionaire and investment legend – is invariably hostile to the world’s most popular cryptocurrency. The owner of an estimated net worth of $124 billion has just said that while he has no idea if the price of Bitcoin will continue to rise, he is convinced that digital assets generate no real value.

– If you told me that you have all the bitcoins available and that you sell them to me for $25, I wouldn’t take them because what would I do with them later? And even if I bought them, I would have to sell them to you later somehow. It doesn’t lead anywhere. Apartments generate income through rent and farms provide food. To have value, assets must provide something to someone, explained Warren Buffett.

He added that if he had the chance, he would write a check for $25 billion in exchange for 1%. of all farmland or all housing in the United States, because both of these products offer real utility. However, he wouldn’t even spend $25 for 100%. bitcoin supply.

Charlie Munger, 98, vice chairman of the board of Berkshire Hathaway and longtime business partner of 91-year-old Warren Buffett, hasn’t changed the approach to bitcoin either. – First, bitcoin is stupid because there is still a chance that its value will drop to zero. Second, it makes us look ridiculous compared to the Chinese Communist leader. Even he was smart enough to ban bitcoin in his country – Munger said.

While the “Oracle of Omaha” and his associate aren’t changing their stance on bitcoin, it’s Jamie Dimon, the chairman of JP Morgan and one of the biggest cryptocurrency skeptics. Previously, the banker called bitcoin a scam on an unprecedented scale and reiterated that he has no intention of supporting the sector, despite JP Morgan looking increasingly favorably on cryptocurrencies. .

Last week, Dimon admitted that while he still dislikes cryptocurrencies and recommends extreme caution, everyone is free to invest in whatever they see fit. He pointed out that cryptocurrencies can be useful, especially when settling international payments.

– Not everything about cryptocurrencies is bad. If I want to send $200 to a friend in a foreign country, I can do it by traditional methods, but then it will take two weeks and cost $40. However, I can do it with bitcoin or other cryptocurrencies and it’s only a matter of seconds – Jamie Dimon concluded.

Robinhood – the operator of a very popular application for investing in the stock market – discovers how difficult the cryptocurrency market is. The company presented very poor financial results for the first quarter of 2022. During this period, the company recorded an operating loss of $143 million, compared to a profit of $115 million a year earlier at the end of the year. same era.

Last quarter, Robinhood sales were down 43% and cryptocurrency trading revenue was down 39%. The company announced that it would reduce by 9%. employees to maximize profitability by the end of the year.

The Robinhood Fellowship looks terrible. Today, a share of the company costs less than $11. Meanwhile, in August 2021, shortly after the stock market debut, the price hit $85. Berkshire Hathaway’s aforementioned Charlie Munger makes no secret of his satisfaction with Robinhood’s failures. He is an outspoken opponent of the investment platform, which – he says – makes most of its profits by charging fees for order flow. In other words, it makes money by selling its customers’ orders to third parties.

– It’s just terrible that something like this happens to decent citizens willing to invest their resources. It is very wrong. You shouldn’t make money by taking advantage of your customers’ ignorance – commented on Robinhood Munger’s actions in 2021. And recently, he added that “the business model of this company was disgusting. God is getting fairer. There is some justice in this world.”

Robinhood denies the allegations. “It’s very annoying for Mr. Munger to misinterpret our platform and a customer base he knows nothing about. No, Robinhood doesn’t charge commission. We’ve never done that. Munger should just say this what he really means: if you don’t look, think or act like him, you can’t call yourself an investor. get lost on cryptocurrencies,” Robinhood said in a report.

Jacek Brzeski

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