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Vetle Lunde, crypto markets analyst at K33 Research, sees parallels between bitcoin’s recent rally since the 2022 crash and the price pattern of 2018 to 2019.

In an interview with CoinDesk TV’s “First Mover” program on Monday, Lunde said that “the current phase of unloading and recovery is remarkably similar to that of 2019, both in terms of duration and price movement.”

In a research note to clients last week, Lunde wrote that bitcoin could reach $45,000. BTC was currently trading at around $29,440, down 2%, although it is up around 80% in 2023. The comeback followed a year of turmoil that saw many major companies declare bankruptcy, sending at-risk investors fleeing the crypto markets.

“We saw a lot of forced selling in the latter part of 2022, as well as selling by investors who became cautious,” Lunde said. “This has led to people being under-exposed. And it has also enticed many people to be short (crypto) conservative by adding exposure. This creates this dynamic where Bitcoin feeds off your short squeezes and moves higher.”

He added that the neutral sell-off in derivatives, despite recent price gains, are further signs of investor caution. That sentiment may change, though relatively low market liquidity remains a potential weight on future pricing.

Lund believes weak signs last week that the US central bank will ease its tight monetary policy amid mildly encouraging inflation data could boost market sentiment.

He blamed the fall in crypto prices last year, in part, on companies overextending themselves when interest rates were near zero.

“It was a big spend, a big focus on growth,” Lunde said. “So you had this environment where miners took a lot of bitcoins, held a lot of bitcoins, and then got exposed to price crashes, and all the crypto banks started ignoring due diligence.”

But the 2022 industry crisis, which included many major companies declaring bankruptcy, including crypto hedge fund Three Arrows Capital, is already benefiting markets by weeding out bad actors, Lunde suggested. “Many of these rotten fruits are off the market,” he said. “So the whole market is now in a stronger phase where it can handle higher interest rates for longer.”

He added: “The industry has learned. I am sure that, unfortunately, we will experience similar crises in the future. But for now, those types of risks have been left out of the market. So the market feels much safer at the moment.



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