When Bitcoin was trading above $60,000, the smartest analysts and financial-minded people told investors that the BTC price would never fall below the previous all time high.
The same people also said $50,000 was a buy opportunity, and then they said $35,000 was a generational buy opportunity. Later, they also suggested that BTC would never fall below $20,000.
Of course, “now” is a great time to buy the dip, and one would think that buying BTC at or below $10,000 would also be the buy of a lifetime. But now all the so-called “experts” have fallen silent and are nowhere to be seen or heard.
So investors are left to their own devices and thoughts to judge whether the bottom is in or not. Should one be patient and wait for the “fall to $1[ads1]0,000” forecast, or is now the time to buy Bitcoin and altcoins?
Usually calling the prices is a futile task. What is very important to focus on is whether or not there are fundamental reasons to choose to invest in Bitcoin.
Sure, the price has changed drastically, but has Bitcoin’s underlying network and the infrastructure around Bitcoin as an asset improved or degraded? It is important to zoom in on this data because for investors, this is where you should get your confidence and investment task.
That is precisely why Cointelegraph hosted one Twitter Spaces with analysts Joe Burnett of Blockware Solutions and Colin Harper of Luxor Mining. Here are some highlights from the conversation.
Stock Markets Will Decide When Bitcoin Price Can ‘Rebound’
According to Blockware Solutions analyst Joe Burnett, Bitcoin price is heavily influenced by Federal Reserve policy and its impact on stock markets. Burnett said:
“The macro environment is obviously weighing heavily on the price of Bitcoin. High CPI inflation has led to an aggressive Fed since November 2021. Higher interest rates inevitably cause all assets to fall. Interest rates are basically gravity on financial assets, just basically discounted cash flow analysis. And these rising interest rates are an attempt to destroy demand and destroy inflation by the Fed. It obviously puts pressure on all risk assets, including Bitcoin.
When asked about the on-chain Bitcoin hash band indicator indicating that BTC had bottomed out and miners had capitulated and confirmed that the Bitcoin bottom was in, Burnett said: “I think with all kinds of similar on-chain type metrics, you definitely take it with a grain of salt. You can’t look at it in a vacuum and say, yes, the bitcoin bottom is in.”
“If US stocks make new lows, I certainly expect Bitcoin to follow suit. That said, I mean, if you look at the fundamentals of Bitcoin itself, I think smaller capitulations usually mark Bitcoin bottoms. And a hash-driven indicator that Charles Edwards created basically shows that there was a miner capitulation this summer.”
Related: Canaan CEO Says Opportunity Outweighs Crisis As Bitcoin Miners Struggle With Shrinking Profits
Synergy between Big Energy and Bitcoin miners is a net positive for BTC
Discussion of the growing partnership between major energy providers, oil and gas companies and industrial-scale Bitcoin miners has been a hot topic throughout 2022, and when asked about the direct benefits of this relationship to Bitcoin itself, Colin Harper said:
“I don’t think that mining does anything bad or good for Bitcoin. I think it’s good for Bitcoin in the sense that in the long run it will actually strengthen the network security, decentralize mining and put it in like basically every corner of the globe if you have energy producers extracting it. But when it comes to actually doing something about the price, I think it’s just kind of a broader adoption thing. And whether people want to use it day-to-day as a medium of exchange, store of value and just general investment.”
Harper elaborated, “If these companies start extracting it, it becomes more palatable. It becomes less stigmatized. Depending on, I guess, the oil producer and that person’s politics.”
When asked what Bitcoin mass adoption might look like in the future, in relation to the growth of the mining industry, Harper explained that:
“It’s only going to be a matter of time before they start integrating Bitcoin into their stacks. And I think that’s when things get interesting in terms of mining as an industry, because if you have the producers of the energy and the people who own the energy extraction of Bitcoin, then it makes it very difficult for people without these assets to eventually make money because you’re going to see hash price, which is already trading in backwards. Finally, you can imagine a future where only energy producers and those who are invested with or embedded in energy producers can actually monetize their bitcoin mining.”
Regulation and a growing desire for self-storage will drive Bitcoin Lightning Network growth
Both analysts agreed that while it may take a handful of years, the growth potential for layer-2 Bitcoin is bright. Burnett predicted that “over time, more and more people will learn to claim final settlement of their Bitcoin, which means more people will hold their own keys.”
According to Burnett:
“If Bitcoin adoption grows by 100x or 1000x, there’s going to be a lot more competition for scarce block slots, and the fees on the chain will probably go up just because people will demand a lot more settlement, more settlement sizes on the base layer. But the block space to settle on the basis is fixed. So these on chain fees going up will basically, in my opinion, potentially make lightning channel liquidity that is already open and available. That will make it more valuable.”
Harper agreed wholeheartedly, adding that, in his opinion, the Lightning Network “will be the thing that allows Bitcoin to be used as a worldwide medium of exchange and also, as Jack Mallers has put it, it’s the thing that can sort of set Bitcoin apart.” , the asset from Bitcoin, the payment network in a way that is actually scalable.”
Tune in here to listen to the full conversation of Twitter Space.
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