Bitcoin Rebound Running Out of Steam as New Money Remains Wary of Piling in By

© Reuters

By Yasin Ebrahim

– Bitcoin fell Monday to remain on exnesscourse to post its fourth-straight day of losses at a time when activity on its network continues to suggest that the bear market is far from over.

BTC/USD fell 3.5% to $22,994.

Much of the recent rally has been driven by long-term bitcoin investors, or ‘hodlers,’ – those with the most conviction -- but new investors hold sway over whether any move higher has staying power.

The Bitcoin network remains “HODLer dominated, and as yet, there has not been any noteworthy return of new demand, as viewed through the lens of on-chain activity,” cryptocurrency research firm Glassnode said in a report.

But the lack of new funds into bitcoin isn’t the only factor that is pointing to a barren environment for bitcoin enthusiasts. Transition fees remain in bear-market territory, close to the lowest levels of the year at 13.4 BTC per day, or about $22,983.80.

A rebound in transition fees is “likely to be a signal of recovery,” Glassnode said, adding that “bull markets typically maintain elevated fee rates.”

The latest dip in bitcoin comes just days after the popular cryptocurrency piqued investor interest with a notable rally to top $24,000 following bets that the U.S. interest rate hikes are nearing the end.

Federal Reserve Chairman Powell hinted last week that the central bank could begin to ease the pace of monetary policy tightening, which has drained liquidity and hurt growth markets such as crypto, to reassess the impact of rate hikes on the economy and inflation.

Investors expect the Fed to raise interest rates to around 3.3% by the end of the year – from about 2.375% currently, but forecast no further hikes after that.

"We project the federal-funds rate to fall from a peak 3% at the start of 2023 to 1.5% by 2024," Preston Caldwell, Head of U.S. Economics for Morningstar, said in a report last week.

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