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Bitcoin continued its New Year’s rally over the weekend, reaching its highest level since mid-August. However, investors will probably have to endure a few more hurdles before they can get through this crypto winter. Here is one observation about the current cryptocurrency rally Bernstein analysts made in their memo to investors on Monday. They call this a mean-reversion rally, meaning that the price of Bitcoin returns to its long-term average or average level. “We believe there is still some headroom in the mean-reversion of cryptocurrencies,” analyst Gautam Chugani said in a report. “Bitcoin has never had two years of negative returns in a row in its 14-year history, so I am wary of being bearish here. Is it the beginning of? This was his highest level since Aug. 19, and after much damage from the demise of Terra and the bankruptcies of Three Arrows Capital, Celsius and Voyager, in his Federal Reserve Chairman Jerome Powell’s Jackson Hole. speech and his fall of FTX. Bitcoin is already up 39% year-to-date after dropping more than 60% of his 2022. Ether is up almost 36%. BTC.CM = 6M Mountain Bitcoin He Nonetheless, Chhugani attributed the recent rally to capital already within the crypto industry, a “sidelined stablecoin” being deployed. I believe it is. He said no “new capital allocations have been made to sustain this uptrend.” Moreover, although there are some competitors, the market “lacks a clear innovation theme” to attract new capital, analysts added. “DeFi could start growing with the integration of real-world assets, or NFT gaming teams could start delivering early alpha versions of video games,” said Chhugani. “While we wait and see which innovation themes will drive the new cycle, we will continue to caution bears against taking 2022 pessimism too far.” As Crypto Asset Class Becomes “More Regulated” As time goes on, Chugani expects institutional investors to take crypto positions this year, he said. Analysts added that more positive regulatory developments in Hong Kong could give institutional investors peace of mind. – CNBC’s Michael Bloom contributed to this article.
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