Steven Ehrlich, Director of Research at Forbes Crypto, has suggested that the price of bitcoin could keep on dropping over the next few weeks as rising interest rates are making safer investments more attractive, while bitcoin isn’t behaving as a safe investment itself.
In an interview with Nasdaq Global Markets reporter Jill Malandrino, Ehrlich said that he believes bitcoin’s bull run may be somewhat exhausted as some of the institutional investors that entered the market over the last few months may now be taking profits.
The price of bitcoin, it’s worth noting, moved from $11,000 in October 2020 to a new all-time high near $62,000 this month, before its price corrected to $53,000 according to CryptoCompare data. Since BTC started surging several companies disclosed BTC investments, including Tesla, Square, MicroStrategy, and others.
To Ehrlich, the price of bitcoin may have been recently dropping because of rising interest rates. Per his words, the 10-year T-bill’s rate has hit 1.5% this week, and according to CNBC it has since climbed to 1.64%, making it more interesting to investors with a lower-risk profile.
Per his words, bitcoin is “promoted as a safe-haven asset” but has been moving as a riskier asset, “something akin to growth stocks.” As the economy grows and inflation rises, he said, the Federal Reserve may raise rates further “which could harm bitcoin in the short-term.”
Ehrlich noted that while he is still “very bullish on it” we could see periods of sideways trading and a correction in the near future. Addressing Ethereum, which has outperformed BTC over the last few months, he noted that most decentralized finance (DeFi) and non-fungible token (NFT) applications are on top of ETH.
He added institutional appetite for ETH has been growing over the last few months and noted that a publicly-traded firm has even invested in ether. As CryptoGlobe reported, earlier this month Hong Kong-listed Chinese firm Meitu has revealed it invested $22.1 million in ether and $17.9 million in bitcoin.
The growing usage of the Ethereum network and the approaching launch of Ethereum 2.0 have also likely been contributing to the cryptocurrency’s growth.