Something strange is happening with the Bitcoin (CRYPTO: BTC) price in 2023.

At the time of writing, BTC is trading for US$24,173 (AU$35,385). That's up 46% from what the world's original crypto was worth on 1 January, according to data from CoinMarketCap.

That's also more than four times the 11% gains posted by the Nasdaq Composite Index (NASDAQ: .IXIC) so far in 2023.

What's strange about that?

Is the Bitcoin price correlation to stocks vanishing?

Here's what we wrote in early January when we covered the 65% Bitcoin price drop over the course of 2022:

If nothing else, 2022 showed that [Bitcoin] is closely linked to the performance of growth stocks. And highly susceptible to the impacts of rising interest rates.

Yet here we are, less than two months later, with central bankers still ratcheting up interest rates to combat stubbornly high inflation, and Bitcoin has proven surprisingly resilient.

Here's what we mean.

According to figures supplied by Bloomberg (using yesterday's slightly higher Bitcoin price), "A 40-day correlation between Bitcoin and the S&P 500 has slid below 0.3 to the lowest since 2021 from a May record above 0.8."

A correlation of 1 would mean the Bitcoin price moves precisely in line with the S&P 500 Index (SP: .INX).

Crypto research company Kaiko noted, "Crypto has been decoupling from traditional assets in 2023 … crypto-specific events increasingly drive the market."

JPMorgan Chase strategist Nikolaos Panigirtzoglou pointed to the greater influence of retail investors in 2023, with many corporates having abandoned their forays into crypto in 2022 following several digital token meltdowns and exchange collapses.

"This positive retail impulse year-to-date is naturally more dominant in crypto given the absence of institutional investors at the moment," Panigirtzoglou said.

"It became one of the themes to watch in 2022, crypto market correlation with traditional markets, as investors around the world reacted to rising inflation and subsequent rate hikes," eToro market analyst and crypto expert, Simon Peters said.

"If the Bitcoin price does indeed move differently to macroeconomic events then it could provide significant support for using it as a hedge against other markets – akin to gold," Peters added.

A word of caution

With that said, crypto investors should proceed with caution before making too much of this nascent trend. Or non-trend.

Let's not forget the Bitcoin price crashed by 65% in 2022.

And the world's top crypto remains volatile, trading as low as US$21,460 and as high as US$25,134 over the past 30 days.

Whether 2023 will see it continue to be decoupled from moves in global share markets remains to be seen.

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The cryptocurrency industry is back under the microscope of United States regulators, prompting fears of a clampdown. Concerns about what could come next have weakened the Bitcoin (CRYPTO: BTC) price by 4.9% over the past 24 hours.

At the time of writing, the original cryptocurrency is sitting at US$21,853. The latest decline takes the crypto asset's weekly fall to 7.3% after experiencing a 40% surge throughout January.

Tightening chokehold worries investors

A dark cloud has hung over crypto since it began gaining mainstream popularity. An uncontrollable risk to those who invest in it has always been a damaging regulatory intervention. Various recent developments in this area have brought these concerns to the surface once more.

Yesterday, reports flowed through that the US Securities and Exchange Commission (SEC) was investigating Kraken, a major crypto exchange with more than 9 million clients, for alleged securities violations.

There's a lot of backstory to this, but what is important is there has been an ongoing debate around the classification of different cryptocurrencies. Namely, what is deemed a security and what is considered a commodity.

The decision is critical for how crypto assets are treated and, ultimately, the price of Bitcoin and others.

Alongside the Kraken reports, Coinbase Global Inc (NASDAQ: COIN) CEO Brian Armstrong revealed rumours of the SEC potentially wanting to crack down on staking for US customers altogether. Armstrong aired this regulation speculation via a tweet, as shown below.

Fast forward to today, and we now know that Kraken will cease its crypto-staking services immediately following a settlement with the SEC. Additionally, the company will pay $30 million for offering unregistered securities.

The move has created unease among investors and the industry. In fact, some believe the stance on staking could be a part of a broader move, labelled 'Operation Choke Point 2.0', to remove crypto completely from the US.

Pain for more than the Bitcoin price

Bitcoin might be the most popular crypto to take a hit over the news, but it isn't the only one languishing after the outcome. Other major assets riding lower following the news include:

• Ethereum (CRYPTO: ETH) is down 6.3% to US$1,546
• Cardano (CRYPTO: ADA) down 8% to 36 US cents
• Solana (CRYPTO: SOL) down 11.8% to US$20.45
• Avalanche (CRYPTO: AVAX) down 11% to US$17.88

Investors will no doubt be closely monitoring whether regulation could begin to creep further into decentralised finance (DeFi). For now, the outlook for staking is much murkier than it was a week ago.

The price of Bitcoin remains 50% below where it was a year ago.

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As we covered here, rising interest rates, tech selloff, and numerous industry scandals and collapses led to the world's largest cryptocurrency losing approximately 65% of its value.

Will things be better for the Bitcoin price in 2023?

While forecasting the Bitcoin price seems like an impossible task, that hasn't stopped a number of analysts from giving it a shot.

Unsurprisingly, these analysts have vastly different expectations for the cryptocurrency.

For example, according to CNBC, Bitcoin bull Tim Draper from Draper Fisher Jurvetson believes the cryptocurrency could climb almost 1,400% to US$250,000 in 2023.

In fact, Draper suspects that the Bitcoin price could rise to this level by the middle of the year. Though, it is worth noting that he made the same prediction for 2022, which clearly didn't eventuate.

Draper expects female investors to be the key driver of this gain. He told CNBC:

My assumption is that since women control 80% of retail spending, and only 1 in 7 bitcoin wallets are currently held by women that the dam is about to break.

Bitcoin bears

The team at Standard Chartered isn't buying into this. It has suggested that the Bitcoin price could tumble by over two-thirds to US$5,000 in 2023.

It warned that rising bond yields and a plunge in technology stocks could lead to an acceleration of the Bitcoin selloff and cause further bankruptcies and collapses in the crypto world.

This view is shared with Mark Mobius from Mobius Capital Partners. He warned that higher interest rates will reduce the appeal of Bitcoin and is expecting the cryptocurrency to fall by a third to US$10,000 in 2023. Mobius told CNBC:

With higher interest rates, the attraction of holding or buying Bitcoin or other cryptocurrencies becomes less attractive since just holding the coin does not pay interest.

Time will tell which analysts make the right call.

The post Will the Bitcoin price rise 1,400% in 2023? appeared first on The Motley Fool Australia.

The Bitcoin (CRYPTO: BTC) price currently stands at US$16,699 (AU$24,454).

That's right about where BTC kicked off the new year three days ago.

But it's some 65% lower than the US$47,170 the world's first and still top crypto commanded on 1 January 2022.

Adding in the selling action in the final seven weeks of 2021, the Bitcoin price closed 2022 down 76% from its all-time 10 November 2021 highs, according to data from CoinMarketCap.

Here's what went wrong for the leading digital token in the year gone by.

Bitcoin price hit by multiple headwinds

On a macroeconomic level, the Bitcoin price was hammered by the same forces which saw tech shares take a beating last year.

Namely, fast-rising interest rates instituted by almost every leading central bank the world over.

The rapid increase in the cost of money saw the tech-heavy NASDAQ Composite Index finish the year down a painful 34%. Here on the ASX, the S&P/ASX All Technology Index (ASX: XTX) fell a similar amount.

If nothing else, 2022 showed that the Bitcoin price is closely linked to the performance of growth stocks. And highly susceptible to the impacts of rising interest rates.

The crypto world was also rocked by a number of massive meltdowns in 2022.

First, there was the implosion of TerraUSD (CRYPTO: UST) in May. The so-called stablecoin was intended to be pegged to the US dollar. But a liquidity crunch saw crypto investors rush to sell their holdings, driving the token to mere pennies on the dollar.

Jittery investors sold off most cryptos over the following weeks, and the Bitcoin price was not spared.

As if that wasn't enough, November saw the collapse of global crypto exchange FTX.com.

Co-founded by Sam Bankman-Fried, FTX was one of the top five crypto exchanges in the world.

But in another instance of liquidity evaporating, FTX went belly up almost overnight and Bankman-Fried is now facing a potentially lengthy jail term in the United States.

In the immediate aftermath of the FTX collapse, the Bitcoin price fell to more than two-year lows of US$15,599.

What's next?

As for what crypto investors might expect in the year ahead for the Bitcoin price, much of that will hinge on interest rates.

Should the US Federal Reserve and other leading global central banks begin to ease off on their aggressive tightening paths, it should throw up some welcome tailwinds for tech stocks and crypto assets alike.

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The Bitcoin (CRYPTO: BTC) price is kicking off December in positive territory.

BTC is up 4% overnight to US$17,170 (AU$25,289).

That will certainly come as good news to crypto investors who watched the token nosedive in November.

Here's what happened in the month just gone.

How did the Bitcoin price move in November?

Depending on your time zone, the Bitcoin price was right around US$20,564 as we flipped our calendars over to November.

By the time we flipped that calendar over to December last night, the token was worth US$16,460, down 20% over the month.

And there was plenty of the crypto's characteristic volatility on display.

Over the month, the Bitcoin price traded as low as US$15,599 and as high as US$21,447, according to data from CoinMarketCap.

Why did the world's first crypto come under intense selling pressure?

After a strong October performance, which saw the Bitcoin price performance beat the performance of the tech-heavy Nasdaq Composite (NASDAQ: .IXIC). November went decidedly the other way.

The biggest drag on Bitcoin, and indeed most non-stable altcoins, was the initial liquidity crunch and subsequent collapse of crypto exchange FTX.com.

The Bahamian-based exchange, founded by Sam Bankman-Fried, was the fifth largest in the world before its undoing.

Problems arose as investors were made aware that FTX was backed, to a significant degree, by the exchange's own utility token FTX Token (CRYPTO: FTT). That clearly didn't sit well with veteran investors.

With Bankman-Fried now having declared bankruptcy, billions of dollars look to have gone up in virtual smoke.

On the day the news of FTX liquidity issues hit the wires, the Bitcoin price plummeted below US$15,680, marking an unwanted two-year low.

The FTX collapse and that of related Alameda Research saw analysts at JPMorgan take a bearish view on cryptos. They forecast the Bitcoin price could slide all the way to US$13,000 as investors digested the new uncertainties.

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It's been a pretty ordinary few weeks for cryptocurrencies and cybersecurity.

In Australia, millions of consumers have had to deal with the theft of their private information from Medibank Private Ltd (ASX: MPL) and Optus.

Globally, the finance industry has been left bemused — and distressed — at the collapse of giant crypto exchange FTX.

While these issues are front-of-mind, the Australian Securities and Investments Commission this month warned Australians to be vigilant about crypto scams.

According to ASIC deputy chair Sarah Court, Australians lost in excess of $710 million from investment fraud in 2021, which was a shocking 135% higher than the previous year.

"The main driver of the increase was cryptocurrency investment scams, where losses increased by 270%," she said.

"The ACCC have advised that losses to crypto scams have increased further in 2022."

If you're in one of these 10 situations, watch out

The corporate watchdog stated crypto scams fall into one of three broad types:

• Scams where the investor thinks they're putting money into a genuine asset, but the app, exchange or website is fake
• Scams selling fake crypto tokens to steal your legitimate cryptocurrency (like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH)) in return and crypto trading jobs that are just facilitating money laundering
• Scams that use digital assets to make a payment

So how can you tell if something is a scam? 

ASIC has published 10 signs that likely mean you're dealing with a criminal trying to steal money or data. 

Be very suspicious if one or more of these things happen to you:

1. You receive a golden offer or opportunity just out of the blue
2. You see a faked celebrity endorsement
3. A romantic interest you only know online starts asking for crypto
4. You're pressured to transfer crypto from your current wallet or exchange to another site
5. You're directed to pay for a financial service using crypto
6. The app you're about to install isn't available on Google Play or the Apple Store
7. You have to pay a fee to access your own money
8. You are guaranteed a certain level of returns or offered free money
9. Unfamiliar digital tokens land in your digital wallet
10. The exchange withholds investment returns for supposed "tax purposes"

Court implored those who suspect they've fallen for a scam to "act quickly".

"Don't send any more money. Block all contact from the scammer," she said.

"Do not delay. Contact your bank or financial institution immediately to report the scam. Ask them to stop any transactions. Also, warn your family and friends so they can watch out for potential follow-up scams."

The deputy chair reminded investors that financial loss is not the only cost when falling victim to such fraud.

"Scams cause emotional stress and can impact relationships."

More information on crypto scams can be found on ASIC's Moneysmart website. Crisis support is available through Lifeline on 13 11 14 and emotional support via Beyond Blue on 1300 22 46 36.

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The Bitcoin (CRYPTO: BTC) price has taken a nosedive since the collapse of Sam Bankman-Fried's FTX.com crypto exchange and its related trading company Alemada Research.

This came after news emerged that FTX was partly backed by its own utility token, FTX Token (CRYPTO: FTT), rather than good old-fashioned fiat currency. The resulting big slide in the value of FTT quickly led to a major liquidity crunch for FTX and sent crypto markets into a tailspin.

On 6 November, BTC was trading for US$21,162. At the time of writing, the Bitcoin price stands at US$16,382. That's down 23% since FTX got into trouble and down 66% in 2022.

With that in mind, what might crypto investors expect next?

What could be next for the Bitcoin price?

The FTX meltdown could throw up some continuing headwinds for Bitcoin.

That's according to analysts at JPMorgan, who forecast the Bitcoin price could slide all the way to US$13,000 on the back of these new uncertainties.

According to the analysts (courtesy of Forbes):

What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking within the crypto ecosystem…

Given the size and interlinkages of both FTX and Alameda Research with other entities of the crypto ecosystem, including DeFi platforms, it looks likely that a new cascade of margin calls, deleveraging and crypto company/platform failures is starting similar to what we saw last May/June following the collapse of terra.

Hani Redha, a multi-asset portfolio manager at Pinebridge Investments, also doesn't believe the Bitcoin price will get any reprieve from institutional investors this time around.

"What's become clear is it will not find a home in institutional asset allocation," Redha said (quoted by Bloomberg).

"There was a period when it was being considered as a potential asset class that every investor should have in their strategic asset allocation and that's off the table entirely."

However, not all the experts are as bearish on the outlook for the Bitcoin price.

Akeel Qureshi, core contributor to Hubble protocol and Kamino Finance on the Solana blockchain, believes a recovery is on the horizon.

Qureshi said (quoted by Forbes), "The market is taking a hit, but crypto's volatility has historically led to shakeouts that ultimately strengthen the space in the long run."

Remember, whatever your own outlook may be for the Bitcoin price, never invest more than you can afford to lose.

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Cryptocurrency prices like those of Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) have been incredibly volatile this week, although that is nothing too new.

Unfortunately for crypto investors, volatile in this case means they have fallen in value, and substantially so. At the start of this week, you could exchange one Bitcoin for just under US$21,000. Today, that same coin is going for around US$17,000. That's a drop close to 20%. Ouch.

It's been even worse for the second-largest cryptocurrency by market capitalisation, Ethereum. Ethereum has fallen from around US$1,550 at the start of the week to the US$1,232 it is commanding today, a fall of more than 21%.

These falls can probably be attributed to the disaster of the global cryptocurrency exchange FTX. As my Fool colleague Bernd dug into this week, FTX is, or at least was, one of the largest exchanges in the world. But after a liquidity crisis, FTX is now in deep trouble and could be facing collapse.

All of this roiled crypto markets and sent Bitcoin to its lowest price in two years. But could this affect the share market?

Has Bitcoin's woes affected ASX shares this week?

After all, many cryptocurrency investors also invest in shares, and vice versa. So investors might be wondering how this massive volatility in the crypto markets could affect their ASX shareholdings.

We're used to hearing arguments in favour of investing in cryptocurrencies that involve the supposed lack of correlation these markets have with other assets like shares. After all, many investors still call Bitcoin 'digital gold'.

Well, what happens in cryptocurrency markets can certainly affect shares that are involved in the crypto markets. Fellow crypto exchange Coinbase Global Inc (NASDAQ: COIN) shares have lost more than 15% over the past five trading days. And the ASX-listed BetaShares Crypto Innovators ETF (ASX: CRYP) has lost more than 20%.

But apart from these crypto-linked companies, the markets overall seem unfazed. Over those same five days, the NASDAQ-100 (NASDAQ: NDX) has risen by a very healthy 6.4% or so. The S&P/ASX 200 Index (ASX: XJO) is up 3.85%, while the American benchmark S&P 500 Index (SP: .INX) has gained over 5%. Even gold is up big.

So it seems that, at least this time, volatility in the cryptocurrency markets has not even touched our share portfolios.

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It's hard to imagine that just a year ago, many notable cryptocurrencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) hit new all-time highs.

In November 2021, the most valuable cryptocurrency, Bitcoin, peaked at around $67,000. Meanwhile, the second-most valuable cryptocurrency, Ethereum, notched an all-time high just shy of $4,900.

That month, the market cap of the cryptocurrency asset class reached a collective value of over $2.8 trillion, a new record. But since then, Bitcoin and Ethereum are both down nearly 65% from their highs and the total crypto market cap sits at just over $1 trillion, a fraction of what it once was.

After this kind of obliteration, concerns are likely warranted. If you're a new crypto investor, this is likely your first time witnessing a price decline of this magnitude. Welcome to crypto.

The overall trajectory of cryptocurrencies has climbed over the past decade. Still, it seemed all hope might just be lost in some brutal stretches. Let's take a look at some of those rough patches to put the current one into a little better context. 

Seasons come and go

One of the first crypto bear markets occurred throughout most of 2014 and 2015. After the asset class hit a new market cap all-time high of more than $15.5 billion in December 2013, a slow descent ensued over the next two years and bottomed around $3.7 billion in May 2015, a 75% decrease.

During that same period, Bitcoin lost 80% of its value and went from around $1,100 to just a few hundred dollars.

Yet prices returned to new highs by January 2018. The total crypto market cap reached more than $827 billion and Bitcoin hit a price of almost $20,000, jumps of 22,000% and 9,400%, respectively. 

Those highs were short-lived, like many market tops, and a crypto winter gripped the market for all of 2018. After finding a bottom around January 2019, the crypto market cap had shed 80% of its value and fallen to just over $100 billion. In a similar fashion, Bitcoin lost more than three-quarters of its value. 

But by November 2021, those woes of 2018 were all but forgotten. In a matter of about two and a half years, the crypto asset class hit a new all-time high of around $2.8 trillion and Bitcoin reached more than $67,000. 

Crypto investors now find themselves in a similar situation to years past. Since that peak, the crypto market cap has lost more than half of its value, and Bitcoin is down nearly two-thirds from where it once was. 

The point is, crypto has been here and done that. Not just once, but three times. And each past decimation has been followed by a considerable rally. 

Lessons to be learned

Investors shouldn't act with certainty and think that just because it happened once, it will happen again, but they can use data to make informed decisions.

And the data shows that historically, investors have the most to gain when crypto and Bitcoin lose around two-thirds of their value.

In addition, the data shows that the return to new highs is not an overnight process. Nor will it happen in a year. It usually takes about two to three years before new highs are made. This isn't to give you a sense of false hope but rather serve as advice to keep a long-time horizon. 

Hindsight is always 20/20, but imagine if you invested at the absolute bottom of each one of these past bear markets.

A $1,000 investment in Bitcoin when it was worth just a few hundred dollars in 2015 would have been worth more than $90,000 by 2018. A similar $1,000 investment at the 2019 market bottom, when Bitcoin was worth just over $3,200, would have grown to around $20,000 by November 2021. 

Investors today need to keep a few things in mind when navigating these tumultuous times. First, maintain a broad time horizon. The true winners of this bear market will be the ones who plan on holding for at least three years and ideally even longer. 

Second, prioritizing cryptocurrencies with a solid track record is a proven strategy to minimize risk and maximize potential.

It isn't unheard of for a cryptocurrency to be here today and not make it to tomorrow. Investing in "blue chip" cryptocurrencies like Bitcoin and Ethereum is most recommended since they account for more than half of the value in the entire crypto market. 

Finally, consistency is key. Ensuring that you continue to gain exposure by investing regardless of the price is the best way to maximize your potential profits should prices return to new highs. Ignore the day-to-day and week-to-week price fluctuations.

Remember, bull markets make you money, but taking advantage of bear markets can make you rich. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The world's original crypto is down 15% over the past 24 hours and down 22% since this time last week.

At the time of writing, BTC is trading for US$15,680 (AU$24,358). The last time the Bitcoin price was at this level was back on 9 November 2020, putting the token at two-year lows.

So, what the heck is going on?

Why are cryptos tumbling across the board?

The Bitcoin price, and indeed the price of most every top crypto, has been hit hard following liquidity issues at global crypto exchange FTX.com.

Co-founded by Sam Bankman-Fried, FTX counts (or is counted) among the top five exchanges in the world.

The liquidity issues began over the weekend.

That's when Changpeng Zhao, the CEO of Binance (the world's biggest crypto exchange) alleged that FTX was backed by a lot of virtual assets. Namely the FTX Token (CRYPTO: FTT), the utility token of the FTX exchange.

Zhao then said he was selling US$530 million of FTT, causing a wider run on the token and roiling crypto markets.

With FTX.com in deep water, Zhao had indicated that Binance would take over the exchange earlier in the week. However, he abandoned those plans yesterday.

The result?

Atop the Bitcoin price hitting two-year lows, FTT is down 61% overnight and down 91% since this time last week, according to data from CoinMarketCap.

What the experts are saying about the crypto rout and tumbling Bitcoin price

Commenting on the sharp sell-off, Ilan​ Solot, co‑head of digital assets at Marex Solutions said (courtesy of Bloomberg), "The market is now in full fear mode. Everyone's looking to see if there's more dominoes and what else needs to be liquidated."

Modular Asset Management's crypto hedge-fund manager Dan Liebau added, "Since I entered the crypto industry in 2016, very few periods tested its market infrastructure and participants like the last 24 hours did."

And Noelle Acheson, author of the Crypto is Macro Now newsletter, said the big decline in the Bitcoin price, which normally tends to be more resilient in selloffs than most altcoins, could mean that institutional investors are exiting their positions.

According to the Acheson:

It's a sign that this is a blow to confidence in the industry as a whole, from the investor's point of view. From the industry's point of view, it's also a pretty steep blow, much more so than what we saw with Three Arrows Capital and with the Terra implosion. This is sitting harder.

Atop the FTX meltdown blow, cryptos could face additional headwinds if today's inflation data out of the United States (overnight Aussie time) comes in higher than hoped for.

Should inflation prove to still be running hot, it will likely mean more aggressive rate hikes from the US Fed in the months ahead.

And if we've learned anything in 2022, it's that the Bitcoin price doesn't respond well to fast-rising interest rates.

The post Why did the Bitcoin price just hit 2-year lows? appeared first on The Motley Fool Australia.

What happened 

Cryptocurrencies didn't just wake up on the wrong side of the bed this morning; they had a terrible night. At 9:45 p.m. ET on Monday, the bottom fell out of the FTX Token (CRYPTO: FTT) and the race was on to sell everything in crypto. 

The worst of the decline was reserved for smaller cryptocurrencies, but as of 9:40 a.m. ET, Bitcoin (CRYPTO: BTC) has fallen 5.8% in the last 24 hours, Ethereum (CRYPTO: ETH) is down 7.5%, and Aptos (CRYPTO: APT) has dropped 13.3%. 

So what 

Drama has been building in the crypto space for about a week after CoinDesk reported that Sam Bankman-Fried's trading arm, Alameda Research, has $14.6 billion in assets and $8 billion in liabilities. That's not a problem in itself, but CoinDesk also said that $5.8 billion of the assets were the FTX Token, FTT. It's notable that Bankman-Fried also founded the FTX exchange, which is one of the top exchanges in cryptocurrencies.

Over the weekend, Binance CEO Changpeng Zhao announced that he would be selling nearly $500 million in FTX Tokens, causing speculation that their value would plummet. That's exactly what happened on Monday night, whether it was because of Binance's selling or traders anticipating the sale.

At the same time, customers are pulling money off of FTX's exchange, which could cause a "run on the bank". Nansen reported that FTX has had $1.2 billion worth of Ethereum and ERC-20 tokens withdrawn in the last 24 hours compared to $540 million in deposits. CryptoQuant says FTX's Bitcoin reserves were zero at one point.

Banks and exchanges typically don't keep enough reserves to pay all customers their money if they withdraw all at once, which is known as a run on the bank. This can cause panic selling and leave a company insolvent relatively quickly. 

Now what 

This is reminiscent of the summer collapse of Three Arrows Capital, which brought down Celsius Network and Voyager with it. Leverage that investors didn't know about on the balance sheet suddenly became problematic when crypto values fell and loans were called back. 

We're not sure this is what's happening at Alameda with the FTX Token, but given the price action and money moving out of FTX, investors are taking a cautious approach. 

It's not clear what happens next. FTX is still one of the largest exchanges, and if it fails, the impacts on crypto could be enormous. I wouldn't be surprised if this isn't the end of the decline in crypto prices, although that means a buying opportunity for long-term investors, because an exchange can go bankrupt, but a token can't.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The cryptocurrency market is changing, evolving into an asset class for investors -- many of them younger -- looking for exposure outside of traditional assets like stocks and bonds.  

Charles Schwab (NYSE: SCHW), a financial services company that provides customers with various investment products, recently conducted a study that shows just how far cryptocurrencies have come in the past decade. The survey asked 1,000 customers with 401(k)s aged 21 to 70 a range of questions related to investing, retirement, and more. Participants were split into four age groups: baby boomers, Gen X, millennials, and Gen Z.  

There were plenty of recurring themes in the study that usually had to do with the embrace of new technology in their investing practices or lack thereof. Millennials and Gen Z consistently showed that they are interested in less traditional assets, and are utilizing smart phones and social media to research and facilitate trades. 

Most interesting was the divide in sentiment on cryptocurrencies between younger generations and the older ones. Only 4% of baby boomers owned cryptocurrencies, compared with 47% of millennials and 43% of Gen Z. 

In addition, participants were asked about what new assets they would like to have access to in their 401(k). At the top of the list for millennials and Gen Z were cryptocurrencies. Roughly 45% of those cohorts wanted to have cryptocurrency options, while only 31% of Gen X and just 11% of baby boomers wanted similar access. 

This research shows similar trends to what a Bank of America study found in mid-October: Cryptocurrencies are becoming more sought after by younger investors. As this trend continues to evolve, it should further legitimize the asset class -- and that makes it a great time for investors to get in now while it's still early. 

Narrowing your options

But there are thousands of cryptocurrencies in circulation today. Which ones should investors prioritize?

To get a better idea, we should look at what cryptocurrencies financial service companies are interested in. Turns out there is one that clearly stands out from the rest: Bitcoin (CRYPTO: BTC). 

As the world's first and most valuable cryptocurrency, Bitcoin is in a class of its own since being created in 2009. Over the last dozen years or so, Bitcoin has transformed from a highly speculative asset deemed to only be used by criminals to one that is owned by high-profile investors, and even Fortune 500 companies like Tesla.

It's this visibility that has helped it become one of the most sought-after cryptocurrencies today, and investment firms are coming to this realization. Charles Schwab competitor Fidelity became the first financial services company to offer its 401(k) customers exposure to Bitcoin in April. Since then, similar moves have been made by other companies to meet client demands. In August 2022 the world's largest asset management firm, BlackRock, partnered with the popular cryptocurrency exchange Coinbase to offer its institutional customers access to Bitcoin trading.

There are other examples, but simply put, Bitcoin is leaps and bounds ahead of any other cryptocurrency when it comes to becoming a recognized asset. As the second-most-valuable cryptocurrency, Ethereum might be the next best option to Bitcoin, but the distance separating the two is wide. For this reason, Bitcoin seems to be the most likely candidate out of all cryptocurrencies to go mainstream first.

We should expect demand for Bitcoin to filter into the world of finance, business, and even our every day lives as younger investors continue to seek exposure. This process won't happen overnight, or even in the coming months, but will likely take years. This is why now is a great opportunity to buy Bitcoin in preparation for a future where the original cryptocurrency cements itself as a necessary addition to every portfolio. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Ethereum (CRYPTO: ETH), the world's number two crypto, has slipped 3% to US$1,542.

With equities under pressure following the latest interest rate hike from the Federal Reserve, both tokens are holding up fairly well today.

But the same can't be said for their performance over the last year.

On 10 November last year, the Bitcoin price reached all-time highs of US$68,790. It's down a painful 71% since that record.

The Ethereum price notched its own record highs six days later. On 16 November Ether was trading for US$4,892. It's fallen 69% from that virtual high water mark.

Facing these kinds of headwinds, two of Australia's pioneering crypto exchange-traded funds (ETFs) are pulling the plug.

Ethereum and Bitcoin price falls hampered these ETFs

Cosmos Asset Management launched the Cosmos Purpose Bitcoin Access ETF (CBTC) and Cosmos Purpose Ethereum Access ETF (CPET) earlier this year.

The Bitcoin ETF made its debut on the Cboe Australia exchange (formerly Chi-X) on 12 May, as The Motley Fool covered here. At that time, the Bitcoin price had already taken a big tumble but was still trading for around US$30,000.

While crypto investors had hoped that may be the bottom for the Ethereum and Bitcoin price rout, we know now that's not how it panned out.

With the funds under pressure, yesterday Cosmos informed investors that it "will be applying to revoke the funds' quotation on Cboe".

Trading in both the Cosmos Bitcoin ETF and Ethereum ETF was halted on Monday. Cosmos stated, "Trading on the funds will continue to be halted pending the outcome of the application to Cboe."

Commenting on the decision, Dan Annan, CEO of Cosmos, said (courtesy of The Australian Financial Review):

While we strongly believe in the asset class, we are all disappointed with this result. The ETFs are ring-fenced by independent external service providers, which is a key transparent risk mitigation structure across all asset classes… We will continue to follow the process in the best interests of all unitholders.

Both crypto ETFs look to be a casualty of fast-rising global interest rates.

The Bitcoin price reached its records when rates across the developed world were at historic lows, with central bankers predicting several more years of low rates.

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The Ethereum (CRYPTO: ETH) price is up 18% over the past month, and it currently rests at the $2,453 level.

The cryptocurrency is struggling year to date, being down around 50%. It has made a recovery since touching an apparent bottom in June, but it has gone through some wild swings since then.

Meanwhile, Bitcoin (CRYPTO: BTC) is also up over the past month, having gained more than 5%. The coin currently trades for $32,002 apiece.

As a risky and speculative asset, cryptos like Ethereum are generally one of the first markets that short-term investors withdraw their funds from and into safer investments such as dividend stocks.

With the crypto market recovering, this could be a sign that investors have started to take a little nibble again at riskier assets. The question is whether this momentum will last moving forward.

Let's take a look at both sides of the argument for investing in Ethereum at its current price point.

What the bulls say

There's good reason to believe that crypto investors are feeling confident about the Federal Reserve's intention to lessen the pace of interest rate hikes, as reported by CoinTelegraph. This may help ease pressure on risky assets such as cryptocurrencies as well as give share investors some breathing room.

The market could also be rallying in anticipation of the release of a number of earnings reports from crypto and web3 companies this week, as reported by The Block. Some companies that are due to announce earnings include Coinbase (NASDAQ: COIN), Robinhood (NASDAQ: HOOD), and Coinshares (STO: CS).

And then on Twitter, Real Vision CEO Raoul Pal posted a bullish tweet stating that he believes Ethereum will continue its bull run.

Pal said:

Is the ETH/BTC ratio the single most bullish major asset price chart in the world? Might well be…

What the bears say

On the opposite side of the argument, there is some evidence that could be interpreted as investors being cautious and taking profits while they can, which could pump the brakes of a continuing rally.

This insight was reported by Be In Crypto on Monday, with active Ethereum addresses making lower lows on the daily charts.

It was suggested the rally could also be artificial and the result of significant Ethereum holders, known as whales, depositing large amounts of the crypto on exchanges, causing prices to rise.

Additionally, it said Ethereum could have reached a temporary price ceiling, with sellers able to take further profits during the peak euphoria of the crypto's rally before coming back down to earth again.

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The Bitcoin (CRYPTO: BTC) price closed out September trading for US$18,694, give or take a few dollars depending on your time zone.

As we flipped our calendars over into November, BTC was swapping virtual wallets for US$20,548.

That puts the world's original crypto up a healthy 9.9% in October.

For some context, the Nasdaq Composite (NASDAQ: .IXIC) finished the month up 3.9%, while here in Australia, the S&P/ASX 200 Index (ASX: XJO) gained 6.0%.

Bitcoin price gains outperform

Atop the outperformance in October, the Bitcoin price moves were less volatile than most crypto investors may have expected.

Over the month, the token traded for a low of US$18,320 and a high of US$$20,988, according to data from CoinMarketCap.

Yes, that's a 14.5% price variance. But remember, Bitcoin gained 9.9% over this time. A rather smooth ride for the virtual asset notorious for its volatility.

And it wasn't just Bitcoin. Most altcoins joined the rally in October.

Despite inflation remaining concerningly high, crypto investor sentiment took a turn for the bullish amid hopes that the US Federal Reserve and other global central banks might not need to raise interest rates as rapidly or as high as the markets have widely priced in.

Higher rates have thrown up some turbulent headwinds to cryptos, which have suffered sell-downs alongside other risk assets, like high-growth tech shares.

Now what?

Where the Bitcoin price heads next will, to a large extent, continue to hinge on interest rates. Particularly the policies adopted by the highly influential Fed.

Remember, Bitcoin hit all-time highs of US$$68,790 on 10 November last year, as the world approached the end of more than a decade of ever-lower rates.

But October did throw out some early signs that the Bitcoin price may be decoupling from risk assets, like tech shares.

Simon Peters, market analyst at eToro, explained that the crypto had held up well despite some disappointing earnings results from the biggest US tech companies.

That looks to be because the percentage of longer-term holders, generally less likely to sell, reached all-time highs last month.

"These high ownership levels signal why we may be seeing a decoupling between US equities and Bitcoin," he said.

Peters added:

At the current price, it is unlikely that entities apart from Bitcoin miners would want or need to sell Bitcoin, whereas given stock market conditions and the negative forecasts from companies reporting earnings, there is perhaps a greater inclination to sell stocks.

The post The Bitcoin price leapt 10% in October. Here's why appeared first on The Motley Fool Australia.

On the What Bitcoin Did podcast, ARK Invest chief executive officer Cathie Wood shed some light on Bitcoin (CRYPTO: BTC). Maybe the most intriguing, but not most important, part of the interview was that she finally disclosed for the first time when she originally bought Bitcoin. Back in 2015, Wood purchased $100,000 of Bitcoin when its price was hovering around $250. That investment is worth about $7.5 million today. 

Wood's faith in Bitcoin has only grown since 2015. When her firm started researching the world's first cryptocurrency, she said they quickly realized Bitcoin had the potential to be "one of the most profound innovations of our time".

Gold, the dollar, and Bitcoin

During the initial research into Bitcoin, Wood and her team worked with one of the world's most prominent economists with expertise in monetary policy Art Laffer. Laffer served under President Ronald Reagan on the Economic Policy Advisory Board and has been active in economic policy on the national and international stage ever since. 

Wood said that it was Laffer's analysis of Bitcoin that led her to make her first purchase. She said that Laffer was in awe of the dynamics behind Bitcoin. As she put it, Laffer said that he had been looking for a currency like Bitcoin "since we went off the gold exchange standard".

Before the US abandoned the gold standard in 1973, the value of the dollar was fixed relative to the price of gold. It's considered by many that the gold standard mitigated the issuance of money and, subsequently, quelled inflation because the amount of physical gold held by a government acted as a limit to the creation of new money.

After the gold standard was dropped, there was little to dissuade the government from printing more money or manipulating monetary policy. When a government can control the money supply, it can finance any agenda or project regardless of how popular it may or may not be. This is simplified to maintain brevity but theoretically, all it has to do is print more money and it can come up with the funding. Today, the dollar lacks traits of intrinsic value that it had when it was on the gold standard and it is almost constantly inflated to finance government budgets.

As the government takes on more costs, it subsequently increases its debt burden. To get a better idea, we can take a look at the US national debt, which has increased more than 6,500% since 1973. Some debt is considered healthy, but a balance sheet with an exorbitant amount of liabilities compared to assets can spell trouble for economies when those debts eventually need to be paid. 

Like gold, but better

Laffer wasn't a huge fan of the current monetary standard and once he discovered that Bitcoin had many characteristics superior to gold, he was sold on its potential. Bitcoin one-upped gold. Unlike gold, Bitcoin is private, digital, easily divisible, and rules-based. 

Let's unpack that one by one because Wood believes that each of these characteristics makes Bitcoin even more valuable than gold. Firstly, Bitcoin runs on a blockchain, which means that all transactions are encrypted and have pseudonyms. Transactions on its blockchain cannot be altered and they can only be halted if the user doesn't have sufficient funds. 

Second, Bitcoin is digital. This makes it much more portable than gold and even the dollar. Bitcoin holders only need a digital wallet on their phone or computer to hold or transfer value. If you lose your phone, the funds are protected and you can access funds by entering your unique password on another device. In addition, digital money serves an integral role in the age of the internet that gold or the dollar falls short of.

Bitcoin is also easily divisible. Even though its price sits at around $20,000 today, users can send and receive fractions of Bitcoin with just the press of a button. No need to carry spare change, find larger or smaller bills in your wallet, or carry around gold bullions (although of course almost no one does that). 

Lastly, Bitcoin runs on specific rules. There is a limited supply that cannot be inflated or manipulated. That means no government can meddle in how it operates or even block transactions. 

Most importantly, it does all of this without any centralized authority overseeing it. Instead of one person or agency running it, computers, referred to as nodes, around the world run the Bitcoin blockchain to ensure that it remains decentralized and operates without any interference.

Bitcoin's potential

When considering all of this, Wood needed no further convincing. She made her original purchase and continues to hold on to that original investment. But since 2015, much has changed. Bitcoin hit a high of nearly $70,000 in November 2021 and its ascension to prominence has even led to publicly traded companies like Tesla holding some on their balance sheet as an alternative to cash, further legitimatizing it as a viable asset. 

It's been nothing short of an astronomical rise. Yet, Wood believes Bitcoin has more in store. In her and Laffer's opinion, Bitcoin could have a value roughly equal to that of the entire U.S. monetary base. During their research in 2015 when they originally posited this, that figure was about $4.25 trillion. If Bitcoin's market cap reached that mark, it would mean one Bitcoin would be worth nearly $215,000 -- a far cry from its current $20,000 price. 

So what's Wood's best advice? Have patience. She said that by investing with a time horizon over 10 years and ignoring price fluctuations, "you're going to win."

RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why one of the smartest investors bought Bitcoin and thinks you should too appeared first on The Motley Fool Australia.

The Nasdaq Composite (INDEXNASDAQ: .IXIC) has been a particularly reliable barometer of how BTC moves.

Look back at the price charts for 2022 and you'll see a 5% gain in the NASDAQ has usually been mirrored by a significantly larger gain in the Bitcoin price.

And when the NASDAQ drops, the world's top crypto has also tended to suffer a larger loss than the tech-heavy index.

Yet this past week may have offered another sign that Bitcoin could be starting to decouple from this correlation.

With some disappointing earnings results reported by the world's top tech shares, the NASDAQ remains down 1% from Tuesday's close, despite some strong gains to finish the week.

The Bitcoin price, on the other hand, is up just over 2% in that time.

Not a huge break from the correlation, mind you, but a break nonetheless.

Why might the Bitcoin price decouple from US stocks?

For some greater insight into what's happening in the crypto markets, we turned to Simon Peters, market analyst at multi-asset trading platform eToro.

Peters told The Motley Fool that despite the disappointing earnings results and outlook from some of the big tech names in the US, the Bitcoin price "has held firm".

Citing Glassnode data, Peters said that last week:

BTC exchange balances continued to drain, which is generally seen as bullish with the HODLer cohort reaching all-time-high coin ownership. The proportion of wealth held in coins that moved in the last three months is now at an all-time low, and the reciprocal observation is that wealth held by coins older than three months is now at an all-time high.

These high ownership levels signal why we may be seeing a decoupling between US equities and Bitcoin.

At the current price, it is unlikely that entities apart from Bitcoin miners would want or need to sell Bitcoin, whereas given stock market conditions and the negative forecasts from companies reporting earnings, there is perhaps a greater inclination to sell stocks.

The Bitcoin price is down 1% over the past 24 hours, currently trading for US$20,562 (AU$32,022).

The post The Bitcoin price may be decoupling from US stocks. Is this why? appeared first on The Motley Fool Australia.

What happened

Cryptocurrencies continued their ascent this morning, as bond yields dropped and investors got more optimistic about the trajectory of interest rates. There has also been an apparent short squeeze this week for several prominent cryptocurrencies.

Over the last 24 hours, the prices of Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) had all made significant gains.

The price of Bitcoin traded roughly 6.6% higher and hovered around $20,777 as of 10:26 a.m. ET today. The price of Ethereum traded roughly 13.4% higher, and the price of Dogecoin was up 10.4%.

So what

Cryptocurrencies have been crushed all year long because of the Federal Reserve's aggressive interest rate hikes, which have led to surging bond yields as well.

But this week, bond yields have receded some, with the yield on the 10-year U.S. Treasury bill coming down from above 4.2 percentage points earlier this week to just above 4 percentage points as of this writing.

That has buoyed stocks and cryptocurrencies, as investors get hopeful that perhaps the bulk of the Fed's rate hikes will soon be at an end. 

But in other news, there have been reports of a big short squeeze that has driven the recent gains of Bitcoin and Ethereum. CoinDesk reported that major exchanges have seen some of the largest liquidations of short positions since the middle of 2021.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why are Bitcoin, Ethereum, and Dogecoin leaping higher today? appeared first on The Motley Fool Australia.

At the time of writing, one BTC is worth US$20,130 (AU$31,589), having traded as low as US$19,261 earlier in the day.

The last time the world's top crypto breached the psychologically important US$20,000 level was on 7 October, according to data from CoinMarketCap.

The Bitcoin price couldn't hold above that level for long then. So does this signal another bear market bounce, or could it be the beginning of a new bull run for crypto investors?

What's lifting the Bitcoin price?

Bitcoin and most all altcoins continue to trade in close correlation to growth equities, like tech shares.

And both the Bitcoin price and tech stocks have enjoyed a lift over recent days, courtesy of two separate factors playing out in the United States.

First, investors are hopeful that the Federal Reserve may not need to raise interest rates as aggressively as the market's been pricing in. The higher interest rate environment unleashed in 2022 to combat soaring inflation has seen the Bitcoin price plunge 58% year to date. To highlight the correlation we mentioned, the Nasdaq Composite Index (NASDAQ: .IXIC)  is down 29% so far in 2022.

A second factor helping support cryptos over the past week is some solid earnings results coming from some of the blue-chip companies reporting in the US. Those expectation beating earnings have helped buoy share markets and cryptos alike.

Which brings us to the question…

Is the crypto bull run back on?

Whether the Bitcoin price and the broader crypto market are back on track to run higher remains highly dependent on what happens to global interest rates.

As the world's most influential central bank, presiding over the world's top economy, the pace and extent of rate hikes from the Federal Reserve is one to watch closely. As the Fed approaches peak rates or, wait for it, even starts to ease, Bitcoin is likely to be amongst the assets to benefit.

Whether or not the past week's optimism over the Fed's potentially more dovish rate setting agenda is warranted remains to be seen.

The post The Bitcoin price just popped back above US$20,000. Is the crypto bull run back on? appeared first on The Motley Fool Australia.

What happened

Today's moves in equity and cryptocurrency markets are providing a nice bout of bullish sentiment for investors who have been beaten down for most of 2022. As of 3 p.m. ET on Tuesday, Ethereum (CRYPTO: ETH), Bitcoin (CRYPTO: BTC), and Cardano (CRYPTO: ADA) had surged 11.7%, 4.9%, and 13.3%, respectively, over the past 24 hours. These moves come amid expectations that the Federal Reserve could tone down its pace of interest rate hikes sooner than expected, as well as some stronger-than-expected earnings reports from large-cap companies this week.   

One of the key drivers of expectations that the Fed could slow down its rate increases came out of new data released today with updated August numbers in the S&P CoreLogic Case-Shiller Home Price Index. While home prices accelerated 13% in August year over year, this increase was down considerably from the 15.6% rate seen in July. Accordingly, this was the steepest deceleration we've seen in the Case-Shiller index since its inception.

And data from the Case-Shiller 20-City index provided an even clearer picture of where prices are headed in major metropolitan areas. This metric showed a 1.6% decline in the top 20 major U.S. markets on a month-over-month basis.

Other positive earnings data from global companies such as Coca-Cola and GM this week stoked hopes that the economy could achieve a potential soft landing, allowing for lower interest rates in the intermediate term.

So what

Today's incredible moves higher in major cryptocurrencies signal the kind of high-correlation, higher-beta moves the crypto sector has been making this year. In general, most of the same macro factors driving stocks mostly lower this year have had a similar outsize effect on digital assets. Accordingly, as a higher-risk proxy for stocks, digital currencies often see larger gains during up days in the stock market.

Should interest rates begin to decline later this year, some analysts believe that we could see an accelerated rally into 2023. That said, it remains unclear if the Cosumer Price Index and Producer Price Index will corroborate with the lagging data we're seeing out of the housing market. 

Now what

Long-term investors looking to call a bottom have been unsuccessful in doing so thus far this year. Most bounces have been met with lower lows, suggesting true capitulation in high-risk assets has not been seen today. In some respects, today's surge in major cryptos could be a signal that speculative capital hasn't been fully washed out yet. Thus, perhaps today's rally is a bearish near-term signal for the market.

But it's entirely possible the market is right in its assessment that rates can't rise much further. The economy has undoubtedly slowed in certain core areas, such as housing. And given the lag in data that's been problematic in leading the Fed to be late to react to the initial surge in inflation, it's possible prices have come down more than the data suggest.

My take is that it's probably too early to say the selling pressure is over for crypto in general. However, these three high-quality tokens could be among the best performers when the market does turn bullish once again. Thus, now could be an interesting time to consider easing into positions as the market searches for a bottom. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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