Huobi Research Report “Taper Landed” depicts the bleak picture of cryptocurrency assets – Markets and Prices Bitcoin News


A report released by the Huobi Research Institute, an investigative agency of the Asian Exchange, studied the impact that the upcoming Fed policy changes may have on cryptocurrency prices. The report titled “Taper Landed: A Turning Point for the Cryptocurrency Market Is Coming” pointed out that due to the upcoming contraction, the continued growth of high-risk assets (including cryptocurrencies) may be difficult to sustain.

Huobi report examines the Fed’s shrinking effect

Latest news from Huobi Research Institute report, Titled “Taper Landed: A turning point in the cryptocurrency market is coming”, determined the possible route that cryptocurrency prices might take due to the Fed’s curtailment actions. A gradual decrease—that is, the continued decline of dollar liquidity in the market due to reduced bond purchases—may have a negative impact on the growth of Bitcoin and other assets.

this Taper The discussion started a few months ago. According to research forecasts, with the reduction in bond purchases and the end of quantitative easing (QE), it may begin in June next year. It is expected that this reduction will not only hit Bitcoin, but also high-risk assets first, and its impact will be transferred to more mature assets later.

Inventory to end of flow

“Taper Landed” is also on the famous Inventory to flow (S2F) model, which predicts the increase in Bitcoin price based on its availability and output in the market. The report was written on November 24 and predicted that the model would fail because of its limited consideration of economic factors surrounding Bitcoin. William Lee of Huobi Research Institute explained:

Why did the “victorious” Bitcoin S2F model suddenly fail? Because Plan B only considered Bitcoin’s monthly SF ratio and historical Bitcoin price data when constructing the model, while ignoring the impact of external macro changes on the market.

Lee further explained that the increase in Bitcoin prices is related to the economic policy relaxation adopted by the United States and other governments, ostensibly to save the market during the coronavirus pandemic. But the report says that the bubble of stock growth and rising cryptocurrency prices may burst next year as the so-called shrinking begins, and the upcoming interest rate hikes that usually follow the shrinking period.

The study concluded that if the taper process accelerates, these effects may be felt more quickly in the market.

Tags in this story

Bitcoin, Crypto assets, Cryptocurrency, U.S. Federal Reserve, Federal Reserve Bank, Huobi, market, Price, price, Quantitative easing, Inventory to flow, Taper

What do you think of the cone research of Huobi Research Institute? Tell us in the comments section below.

Image Source: Shutterstock, Pixabay, Wikimedia Commons

Disclaimer: This article is for reference only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any product, service or company. Bitcoin Network Does not provide investment, tax, legal or accounting advice. The company or the author is not directly or indirectly responsible for any damage or loss caused or claimed to be caused by using or relying on any content, goods or services mentioned in this article.


Source link

Recommended For You

About the Author: AZ