At the beginning of the week, the crypto market showed moderately positive dynamics. Over the weekend, the retail sector, which traditionally demonstrates increased activity during the weekend, was able to help bitcoin. As the benchmark cryptocurrency approached the lower $30,000 boundary, buying momentum increased significantly. It is difficult to say exactly what reaction awaits the crypto market after institutional investors come out, but there is a chance that they will support the growth momentum. An important resistance level at $35K is ahead of us.
The global financial situation is such that the value of assets like Bitcoin will only increase in the long term. We are now witnessing increased inflation in the U.S., a continuous work of the printing press, and support for infrastructure projects, all of which increase the dollar's emission, reducing its value. Bitcoin, on the other hand, is supported by limited emission, as well as active interest from big capital as part of a diversification strategy.
In a sense, at this point, the Bitcoin network's declining hash rate could also end up providing serious support for the first cryptocurrency. The point is that market participants understand that sooner or later, miners will launch their ASICs in new locations, the hash rate will recover, and no catastrophic consequences for the blockchain will happen. It is likely that the move of miners to different countries will even improve sentiment, as all market participants will positively perceive the distribution of computing power of the network.
None liked the fact that the vast majority of computing power has been concentrated in China. The country's authorities have long had an extremely negative attitude toward cryptocurrencies, considering them as direct competition with the national currency. That is why China has been developing its national cryptocurrency with increased speed and will now try to completely displace any analogs. It is difficult to say how the country's authorities will manage to do this, as Chinese holders have always found ways to bypass any firewalls. Nevertheless, officially, the crypto sector in China will soon be finally "defeated".
Particular attention will now be paid to what is happening in El Salvador. The country's authorities have promised to give each adult resident $30 in BTC to stimulate the interest of the country's population in the first cryptocurrency settlement. Nevertheless, there are serious doubts that the government's actions are aimed at integrating Bitcoin into everyday settlements. Rather, it is more about a new race among cryptocurrency offshores. Even if El Salvador's example proves unsuccessful, there is no doubt that the whole world will be watching the situation closely. It is very likely that in the very near future we will see the integration of Bitcoin into the economies of many island states. Traditional offshore economies have lost their appeal, while betting on cryptocurrency could open up new global prospects for them. If the experiment with crypto offshoring pays off in the long run, we will probably see an impulse in demand for the cryptocurrency of such strength that recent highs will seem like very modest price levels.