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<\/a><\/p>\n\u201cInvesting in these cryptocurrencies is based on confidence and liquidity, and as you have a little bit less confidence, you just have a more challenging short-term environment for the cryptocurrencies,\u201d said Keith Lerner, chief market strategist at Truist Advisory Services.<\/p>\n
That\u2019s also put Bitcoin\u2019s claim of being an inflation hedge to test. Fans had argued the digital asset could, thanks to its limited supply, act as a hedge against rising prices. The coin has declined more than 10% so far in July and its year-to-date advance has narrowed to just 6%, meaning that the S&P 500 is outpacing it by roughly 9 percentage points.<\/p>\n
\u201cIt\u2019s premature to say these provide a good hedge. In our view it\u2019s more of an area of speculation — when risk is coming off the market, you also see that in the crypto market,\u201d said Lerner. \u201cThe market is looking at this more as a speculative area of the market and when you have a selloff, the speculative areas of the market tend to get hit.\u201d<\/p>\n
Though Bitcoin\u2019s been declining in recent days amid hotter-than-expected inflation prints, it could still prove to be a good hedge over the long term. And in the short-term, there is an additional reprieve. Bitcoin\u2019s 14-day Relative Strength Index (RSI) — currently at 37 — is nearing oversold levels, which in the past has preceded bounces. But the coin needs to ensure it holds support at $30,000 as any significant breach could drive a large technical selloff.<\/p>\n