If you’re asking yourself, “Is Bitcoin a good investment?” Here’s some news for you. Bitcoin and other cryptocurrencies were tumbling early Wednesday as markets soured on risk assets ahead of the House vote on the United States debt ceiling.
Bitcoin was down 2.9% to $27,136 in the preceding 24 hours. On Tuesday, the biggest cryptocurrency briefly surpassed $28,000 before plummeting drastically.
The plan to increase the US debt ceiling will be debated in the House on Wednesday. While the proposal no longer includes a planned tax on cryptocurrency miners, its ratification and the subsequent issue of government debt might be detrimental to the crypto sector.
In a research note, Matteo Greco, a research analyst at Fineqia International, said that in the mid-term, money is being diverted from riskier assets to buy government bonds. As a result, the stock and digital asset markets may see further volume and liquidity slowdowns, potentially causing price declines.
Bitcoin has rebounded from the lows recorded in the aftermath of the collapse of crypto exchange FTX but has yet to break through the $30,001 barrier.
A sluggish adoption curve following the “crypto winter” that began with the collapse of FTX in November last year has left Bitcoin’s price “well ahead of itself,” according to Jurrien Timmer, director of global macro at Fidelity Investments.
Timmer tweeted on Wednesday that Bitcoin still has promise as digital gold, but it is far more limited than it looked a few years ago.
As discussed in my previous thread, Bitcoin is ahead of itself at its current price of $28k. So what do we make of it? Bitcoin’s price is primarily a function of its adoption curve (and of course its limited supply, which feeds into the curve). Therefore, we need to consider both… pic.twitter.com/aiqpK6kRks— Jurrien Timmer (@TimmerFidelity) May 31, 2023
So, if you’re wondering, “Is Bitcoin a good investment?” It is when you know when to invest in it.
Beyond Bitcoin, the second-largest cryptocurrency, Ether, fell 2.1% to $1,874. Smaller cryptos, or altcoins, fell as well, with Cardano down 1.5% and Polygon down 2.7%, as did meme coins, with Dogecoin down 2.2%.