On Thursday, we finally saw some green shoots emerge during this current Crypto Winter…
For the first time since November 2022, bitcoin breached $19,000. The world’s leading crypto is up over 14% since the start of the year. By comparison, the S&P 500 is up about 5%.
Does this rally mean we’re at the start of a new bull market?
Not according to Daily editor Teeka Tiwari.
In a recent video update, Teeka warned the bull market hasn’t resumed in crypto – at least not yet. (Palm Beach Confidential subscribers can watch the video right here).
Here’s Teeka:
We’ve had a lot of damage done in crypto. Bitcoin has gone as low as $15,000 and change. It’s now trading [above] $17,000 and change (as of Tuesday). But it would be a mistake to think that we’re out of the woods. We’re not.
According to Teeka – while the long-term picture for bitcoin and crypto assets is very much intact – the short-term picture remains murky.
Several threats are still looming over the asset class, including the solvency of Digital Currency Group (DGC), a major player in this asset class.
DGC is the holding company for the Grayscale Bitcoin Trust (GBTC), the world’s largest bitcoin fund. GBTC has $10.7 billion under management, but it currently trades at about a 40% discount to the bitcoin it holds.
Long story short, DGC has a great deal of exposure to the entire FTX debacle. If it’s forced to fold its GBTC fund, we could see a resurgence of volatility in crypto.
While the current rally is encouraging… 2023 will continue to be a difficult year. So adjust your expectations accordingly and remain cautious.
For some final advice, we’ll turn to Teeka:
This is a year for raising cash and putting yourself in a position to put that cash to work when it’s an absolute no-brainer. In the interim, you can nibble on positions here and there. Keep your dollar-cost averaging going. But you want to keep your powder dry.
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Regards,
Chaka Ferguson
Editorial Director, Palm Beach Daily