Paxful Founder Says The Bitcoin Pump To $26,000 Is Weak
Despite the banking crisis in the United States and the latest inflation data, Bitcoin surged this week, reaching a nine-month high above $26,000. However, Paxful founder, Ray Youssef, remains doubtful of the uptrend. In a tweet on March 15, he said the recent BTC leg up is “weak.”
Much of Bitcoin’s price trouble last week stemmed from uncertainty surrounding some of the crypto industry’s biggest banking partners going bust. Silvergate filed for voluntary liquidation while Signature Bank was closed. Silicon Valley Bank (SVB) experienced a bank run and was placed under receivership by California regulators.
Banking stocks dropped in response to this crisis, but crypto assets are relatively firm. Since Friday, BTC’s price has risen approximately 29%, rallying above $26,000 on March 14.
While Bitcoin is relatively higher, Youssef thinks the upside momentum is weak since the pump has low trading volumes. Trading volume is a measure of participation. Traders use this indicator to measure participation and interest.
Based on this observation, he advises traders to take their profits and wait for a cool-off before loading up.
“This btc pump has low volume, even the ordinals pump had more volume. I would beware and take a bit of profit. The empire shall continue striking back hard. Buy back later and keep a 2 year time frame always.” Ray Youssef (@raypaxful) March 15, 2023
The price surge coincides with news that inflation in the United States is gradually falling, in line with economists’ expectations. The Bureau of Labor Statistics’ Consumer Price Index (CPI) reading on Tuesday showed year-on-year inflation had cooled to 6% in February.
Signs of declining inflation may signal that the Federal Reserve (Fed) will stop increasing interest rates in the coming months. The central bank has been increasing interest rates over the past year to combat rising inflation following months of quantitative easing in 2020.
Early this week, Binance, the world’s largest crypto exchange by client count, said it would convert their $1 billion industry recovery fund to, among other coins, Bitcoin. Changpeng Zhao “CZ,” the Binance CEO, said this decision follows the banking crisis in the United States and “changes in stablecoins.”
“Given the changes in stablecoins and banks, Binance will convert the remaining $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including BTC, BNB, and ETH. Some fund movements will occur on-chain. Transparency.”
After CZ’s statement, data showed Bitcoin being deposited to Binance. Analyst James V. Straten said the decision to purchase coins, including BTC and Ethereum, is why there has been a spike in volatility which is further increased by macro factors.
The Bitcoin price is currently stable but is below the $25,000 level.
While the recent surge in Bitcoin price has caught the attention of many investors, some like Ray Youssef remain skeptical. Youssef’s opinion is that the trading volume of Bitcoin during its recent surge is low, signaling a lack of participation from investors which, in turn, could lead to a price drop.
Youssef believes, traders should take their profits while they can or wait for the price to cool down before reinvesting. He even suggests keeping a two-year timeframe for future investments in order to avoid any losses from short-term fluctuations.
Despite the banking crisis in the United States, Bitcoin managed to maintain its stability, indicating the strength of its underlying technology and its continuing popularity amongst investors. The decline in inflation in the United States may lead to the Federal Reserve stopping interest rate hikes, which could, in turn, drive investors towards cryptocurrencies as a store of value.
Additionally, the announcement by Binance to convert their $1 billion industry recovery fund to Bitcoin may lead to an even greater surge in the cryptocurrency’s price. The move by the world’s largest crypto exchange to purchase coins like BTC and Ethereum has already caused an increase in volatility in the market.
Overall, while the recent surge in Bitcoin price is notable, it is important for investors to remain cautious and evaluate the trading volume to avoid potential losses. Nonetheless, the adoption of cryptocurrencies by large institutions like Binance is a promising sign for the future of digital assets.
