Over the past few weeks, the information background around the cryptocurrency market has deteriorated significantly, and the recent declines have only made the situation worse. However, another bad news is that the altcoin market formed a bubble, which will burst soon. In addition, research by Chainalysis proves that there is no reason to believe that bitcoin is a hedge against inflation, which could harm the investment flows of the BTC.
Chainalysis analytical company conducted a study, according to the results of which no accurate statistics are reflecting the correlation between the rate of BTC and the US dollar depreciation. The head of the company's analytical department said that this was proof that BTC does not act as a risk hedge. The expert also emphasized that the introduction of crypto-assets is carried out in countries where the rate of inflation and devaluation cannot be slowed down. In some African and Latin American countries cryptoassets are used in everyday life. That means there should be statistics that show the real advantage of BTC in protecting against inflation.
Chainalysis's viewpoint can be explained by the absence of direct statistical data, but there are financial reports of major investors, such as Tesla Motors, which directly show the profit from the BTC. In addition, several major banks, such as JPMorgan, recommended buying bitcoin in the amount of 1% of the investment portfolio. The share of institutional investors in BTC also indicates the advisability of protective investments in the coin. Therefore, the lack of statistics does not preclude the actual profits that BTC transactions generate. Given Evergrande's possible bankruptcy and monetization of its debt, bitcoin inflation protection will be able to offset other disadvantages of the cryptocurrency and advantages of major competitors.
Despite a promising future, at 5:00 p.m., the cryptocurrency was experiencing significant problems. BTC slipped beyond the key support at $42,800. If it forms a bearish candle at the end of the trading day, the $40,000 retest will be a matter of time. On the daily chart, there are signs of reversing or sideways movement, but right now, the bears are still pushing it below $42,000. And judging by the hourly chart, the downtrend is only getting stronger. The stochastic indicator is moving to the oversold area and the MACD has lost its chances to make a bullish reversal and started falling down. Most likely, the coin will test $40,000 and the market may start to recoup after the fall, but until then, opening long positions is not advised.
The situation with the altcoin market is also tense, as there is a possibility of another collapse due to the formation of a bubble. Euro Pacific Capital CEO and cryptocurrency critic Peter Schiff said that the altcoin market had formed a bubble, which would burst soon. He said the market has more than 14,000 tokens and more than 80 of them have a market cap of over a billion dollars each. If supply exceeds demand, the altcoin market will collapse. There is a certain logic in Schiff's words because right now a large percentage of investors have left the cryptocurrency market due to a powerful collapse and multimillion losses. In such a case, there is indeed a risk of a collapse of the altcoin market. This is also indicated by a big drop in NFT-sector sales, which suggests some overbought, and it is likely that there will be a local collapse in the altcoin market. However, if this does not happen in the next two to three days, then the threat of collapse can be considered as vanished.
