Bitcoin down but certainly not out

Geopolitical tensions and the imminence of Fed interest rate hikes have caused a substantial dip in world markets. Bitcoin has fared even worse, still considered very much a risk-on asset. What is now in store for Bitcoin and the general cryptocurrency market over the next few months and years?

The US government, hand in hand with the US mainstream media have reported with a large measure of conviction over the last few days that Russian invasion into the Ukraine is nigh. 

Russia on the other hand has said that it is pulling troops back from the border. In fact, there is an anecdote going the rounds among Russian diplomats asking that the CIA publish all future Russian invasion dates so that they can arrange their holidays accordingly.

Should the Russians not have invaded over the next few days, and information can be ascertained that most troops have in fact pulled back, then this particular drag on markets will have been dispelled - at least until the next time that it is needed as a distraction.

A Fed rate hike on the other hand should in theory be a much more likely event. The Fed has said it is very likely to push up the interest rate by at least 25 basis points in March, with more and more analysts thinking that this could actually be a 50 basis points rate rise.

Inflation has been climbing steadily and January’s 7.5% figure caused much consternation across markets. The fact that the Fed is still buying treasuries and mortgage-backed securities, although less over time, probably won’t make any inroads into the rising inflation figure.

According to the St Louis Fed, the tapering should have finished by mid 2022, and analysts are saying that the interest rate may well have reached 1% by then. 

Will the removal of the punch bowl, a hike in interest rates, and a continued hawkish tone from the Fed, do the job of stopping inflation in its tracks? It may well do, but it is also extremely likely to flame the fires of an impending recession. 

So where does this leave Bitcoin? In the short term, over the next days and weeks, we may see Bitcoin tracking sideways, with a possible dip down to test the $30,000 support. 

The last dip back down has allowed the Stochastic RSI, which signals momentum, to reset on the daily, and it is already climbing back up on the weekly, and is now touching bottom on the monthly. The monthly has not seen a bottom since 2019, so looking into the next year it would appear that there could be much bullish growth to come.

Whatever the price action in the next few weeks and months, it appears that the dollar and all the other fiat currencies will continue their downward death spiral. There is no other possible scenario in the long term.

Those who hold on tight to their crypto will at least have a chance of survival as world economies eventually go into their tailspin. Taking your crypto off of exchanges is also a good idea, given that government can certainly get at it there.

Pay your taxes, comply with government rules and regulations, but just make sure that any crypto is in your possession - uncertain times are coming, and as in the case of Canada, they are already here.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.