"Digital asset market catches its breath, but risks still loom"

Uk Jin

Summary

Bitcoin (BTC) rebounded after a sharp drop, but the recovery could be limited by macroeconomic uncertainty and weaker investor sentiment.
Strong demand for Bitcoin put options suggests investors’ downside-risk aversion and wariness of further declines remain in place.
The U.S. government shutdown, the DHS budget issue, and Iran-U.S. tensions driving a rise in global oil prices and inflation concerns are seen as headwinds for demand for digital assets.

Forecast Trend Report by Period

Bitcoin (BTC), the bellwether of digital assets, has attempted a rebound after a sharp plunge, but forecasts suggest the recovery could be limited due to macroeconomic uncertainty and deteriorating investor sentiment.

On the 6th (KST), digital asset news outlet CoinDesk reported that while Bitcoin has entered a recovery phase, a complex set of risk factors surrounding the market still remains.

Bitcoin fell as low as $60,000 intraday before bouncing, and is now holding around the $66,000 level.

Top of the list is strong demand for Bitcoin put options (the right to sell). CoinDesk said that "investors’ appetite for hedging downside risk remains intact" and that "caution over the possibility of further declines is still present in the market."

Macro factors were also cited as a headwind. CoinDesk projected that "while President Donald Trump’s signing of a funding bill has brought the U.S. government shutdown to an end for now, the Department of Homeland Security (DHS) budget issue remains, meaning political uncertainty could come back into focus around the 14th."

Concerns about inflation resurfacing were also raised. CoinDesk said that "if global oil prices extend gains amid rising tensions between Iran and the U.S., global inflation could emerge," adding that "inflation fears could hit demand for risk assets such as digital assets."

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