Bitcoin price is unlikely to rebound soon, past Crypto Winters indicate

Investors looking to historical data for clues on whether Bitcoin price's current slump is drawing to a close may be disappointed.

Bitcoin price today was down less than 1% to $43,650 as of 11:54 a.m. in New York. (Bloomberg)

Investors looking to historical data for clues on whether Bitcoin price's current slump is drawing to a close may be disappointed to see that price rebounds have tended to lag those posted by the stock market. The largest digital currency by market value rarely sits within a close range of its all-time highs, according to data complied in a report by Bitooda Holdings Inc. By comparison, major U.S. stock indices seldom fall below a 10% correction from record highs. The S&P 500 and Nasdaq Composite have only experienced two brief bear markets since 2014, including one at the onset of the pandemic. Bitcoin price today was down less than 1% to $43,650 as of 11:54 a.m. in New York.

During that same time period, Bitcoin sustained lengthy drawdowns before hitting new heights, and currently sits in its fourth major dip. The cryptocurrency has hit a record-high 124 times since 2014, while the S&P and Nasdaq reached fresh highs 483 and 482 times respectively, according to Sam Doctor, Bitooda's head of research.

Bitcoin's most recent peak of almost $69,000 in November was achieved during an easy-money environment, with regulators dropping interest rates as the coronavirus pandemic threated financial stability, according Steve Sosnick, chief strategist at Interactive Brokers LLC. Now, as the Federal Reserve signals rate hikes to curb inflation, the token could have a more difficult path upwards, digging itself out of a rout.

“It will require more patience,” Sosnick said by phone. “I don't see the same type of circumstances where money is just going to flood in the way we saw before.”

Crypto firm Fireblocks buys payments tech platform for $100 million

Fireblocks, an infrastructure provider for cryptocurrencies, has acquired First Digital, a stablecoin and digital asset payments technology platform.

Fireblocks and First Digital said on Wednesday they had reached a cash and equity deal, without disclosing financial details, but two sources close to the deal said the purchase price was $100 million.

Fireblocks last month raised $550 million from institutional investors, pushing its valuation to $8 billion.

The First Digital acquisition will expand Fireblocks' existing payment capabilities allowing payment service providers (PSPs) to accept crypto payments.

PSPs and large merchants are eager to meet customer demand for crypto and digital currency payments, but offering these services often entails challenges such as high wallet integration costs and manual anti-money laundering screening.

Fireblocks said the addition of First Digital will enhance solutions it already offers to address those issues.

"What First Digital brings is an awesome product and extensive leadership and know-how in the payments domain," Fireblocks Chief Executive Michael Shaulov told Reuters in a telephone interview. "Specifically the product they're bringing to the market, I think is very applicable to the mass market."

First Digital will also launch a business unit within Fireblocks that is "purely focused on payments and enabling our customers to accept and remit using several kinds of cryptocurrencies," Shaulov said.

First Digital's payment capabilities include stablecoins, cryptocurrencies pegged to a fiat currency like the U.S. dollar.

First Digital Chief Executive Ran Goldi said the deal was a natural fit, given the companies had been partners for two years. He added that over the past six months First Digital "saw lot of interest from companies that three years ago said we were ahead of our time."

Through First Digital, merchants who work with supported payments service providers can simply add an option to accept crypto payments, and the funds are settled in either local currency or crypto.

All First Digital employees will be absorbed by Fireblocks under the deal.

(With Reuters Inputs)