Wintermute attributes Bitcoin's stagnation to macroeconomic changes, correlating it with tech stocks and high-risk assets.
Market maker Wintermute has indicated that Bitcoin's current stagnation is tied to significant macroeconomic changes affecting investment behavior. The cryptocurrency is now showing a correlation with technology stocks, typically regarded as high-risk assets.
Recently, Bitcoin has struggled to maintain levels above $70,000 following a series of liquidations, reflecting a cautious sentiment among investors as buyer activity remains low during price dips. Meanwhile, Ethereum has declined below $1,900, with experts suggesting $1,600 as a potential support level.
Despite a stabilization in prices, institutional demand has not bounced back, with ongoing cash outflows from spot exchange-traded funds (ETFs) and decreasing open interest in the derivatives market. Investors are increasingly opting for put options to hedge their portfolios. Interest in altcoins from larger investors has also diminished quickly.
Wintermute has pointed out that the market dynamics are changing, particularly with the Federal Reserve's influence waning amidst persistent inflation and an ailing economy. The current market is being driven by two main themes:
- AI Sector Revaluation: Investors are reassessing the profitability of AI technologies, leading to reduced growth expectations.
- Deglobalization: Ongoing trade tariffs and fragmented supply chains are driving up raw material costs.
As a result, capital is shifting from growth-oriented stocks to more defensive investments like gold and industrial sectors. Under these conditions, cryptocurrencies are increasingly seen as overly risky.
Looking ahead, the sustainability of current macroeconomic trends will be crucial for Bitcoin's trajectory. Should the shift towards deglobalization and economic stagnation continue, Bitcoin may face further challenges. However, a resurgence in risk-taking could pave the way for a potential recovery, according to Wintermute. As a reference point, Bitcoin's price recently dropped to approximately $62,800 on February 24.
