Bitcoin may be at the bottom – but don’t get your hopes up: it may find it difficult to rise any time soon, according to one investment firm.
A report released Friday from European asset manager CoinShares said investors last week threw new money into exchange-traded Bitcoin — and other crypto products — suggesting a change in sentiment.
But there are other factors that may prevent digital asset markets from rising, says James Butterville, head of research at CoinShares, books.
“We have said for some time that Bitcoin may have reached or are approaching a lower limit,” the report said. “But we don’t see any significant upside potential from here.”
The report added that current macroeconomic headwinds, such as the US bombing of Iran and rising oil prices, could lead to inflation rising again.
The price of Bitcoin rose earlier this week, hitting a seven-day high of $65,501 on news that US inflation was lower than expected. I have Since those gains were erased It recently traded for $64,010.
The price of Bitcoin has typically performed well on news that inflation is falling because investors expect interest rates to fall. But Butterville said, “A rate cut does not appear likely at this stage.”
Worst Bitcoin run ever
CoinShares data showed that investors withdrew a total of $8 billion of their funds taking exposure to cryptocurrencies — “the worst run ever.”
However, last week, things turned around when $287 million hit crypto funds, CoinShares said, with data so far showing that this week looks likely to be another positive streak.
Bitcoin’s price typically performed well when US investors – previously excluded from investing in cryptocurrencies – bought shares in approved exchange-traded funds in 2024.
The products – which are handled by the likes of BlackRock, Fidelity and Grayscale – allow traditional investors or Wall Street institutions to buy positions in Bitcoin via stocks traded on exchanges.
Since BTC reached an all-time high in October at $126,080, cryptocurrency markets have taken a hit as these investors quickly withdraw their money. Bitcoin has struggled to make gains, especially after the United States and Israel began bombing Iran, sending oil prices soaring.
The leading cryptocurrency is now nearly 50% below its record high.
“The prevailing picture is that the current situation is generating interest in adding positions, but caution prevails while sentiment remains broadly negative,” CoinShares added.
