Bitcoin Recovers After Fed Remarks, ARK Suggests 19.4% Portfolio Allocation to Crypto

• Bitcoin rebounds following Federal Reserve Chair Jerome Powell’s comments, tempering hopes for a March interest rate cut.
• ARK Invest recommends a 19.4% allocation to cryptocurrencies in portfolios for 2023, highlighting Bitcoin’s strong performance over other asset classes.
• Celsius prepares to distribute $3 billion in crypto to creditors as it exits bankruptcy.

This article covers today’s key developments in the cryptocurrency market, including Bitcoin’s recovery after Federal Reserve comments, ARK Invest’s portfolio recommendations, and Celsius’ plan to distribute billions to creditors.

Federal Reserve Comments Trigger Bitcoin Recovery

Bitcoin experienced a rebound in the European morning, trading just above $42,000 after Fed Chair Jerome Powell’s comments cooled expectations for an interest rate cut in March. Nick Chatters from Aegon Asset Management remarked that the Fed needs more confidence in inflation levels before considering a cut, but hinted at a potential cut later this year. Bitcoin had dipped to $41,870 but has since seen a gradual increase.

ARK Invest’s Crypto Portfolio Allocation Strategy

ARK Invest, in its annual Big Ideas report, suggests an optimal crypto allocation in investment portfolios of just under 20% for 2023. This recommendation is based on Bitcoin’s impressive performance compared to major asset classes, with its low five-year correlation with traditional assets indicating significant diversification benefits. The firm noted that even minimal allocations by institutional investors could have a notable impact on Bitcoin’s price.

Celsius’ Plan to Distribute Crypto to Creditors

Cryptocurrency lender Celsius is set to distribute $3 billion in crypto to its creditors as it emerges from bankruptcy. The distribution will be conducted through Coinbase and PayPal, and creditors will also receive a stake in the new Ionic Digital Inc. mining operation. Celsius’ bankruptcy process involved a $4.7 billion settlement with U.S. authorities, with former CEO Alex Mashinsky facing trial in September 2024.

Market Insight: Revisiting Bollinger Bands for Bitcoin

The “Bollinger bandwidth” indicator, based on Bitcoin’s weekly price changes, is signaling potential volatility, similar to patterns observed before the significant rallies of 2016 and late 2020. The bandwidth, indicating the spread between upper and lower bands of Bitcoin’s moving average, suggests a major price movement is imminent, although the direction remains uncertain.

Conclusion

In summary, today’s crypto market is shaped by Bitcoin’s recovery post-Fed comments, ARK Invest’s bullish stance on crypto allocation, and significant developments in Celsius’ bankruptcy proceedings. The market also watches the Bollinger bandwidth indicator closely for potential price movements in Bitcoin, reflecting the dynamic nature of the cryptocurrency landscape.