Bitcoin Flat as Traders Look Forward to the 'Year of the Dragon'

Market enthusiasts expect the year of the dragon to bring good fortune for the crypto market, but more traditional analysts advice caution.

AccessTimeIconFeb 5, 2024 at 6:49 a.m. UTC
Updated Feb 5, 2024 at 6:51 a.m. UTC
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Bitcoin (BTC) traded flat, hovering over $42,000 early Monday, while the CoinDesk 20 Index {{CD20}} is down 0.75% at 1,643, according to CoinDesk Indices data, as nations in East Asia count down the last working days before the Lunar New Year holiday.

Over the next few days, East Asia will celebrate the start of the year of the dragon, which is considered to be one of the luckiest and most prosperous animals in the Chinese Zodiac.

(CoinDesk Indices)
(CoinDesk Indices)

Last year, CLSA, a Hong Kong-based brokerage firm, predicted in a January note that 2023 will see market fluctuations, attributing a calmer outlook to the Year of the Rabbit while advising investors to venture beyond their comfort zones cautiously. And indeed, the market “hopped" back from its dismal 2022 performance, with bitcoin having jumped nearly 94% over the last year, with ether (ETH) rising 47%.

According to an analysis by CoinDesk Indices, the CoinDesk Market Index outperformed the S&P 500 fivefold, largely thanks to bitcoin’s outperformance.

While ether underperformed throughout 2023, according to market data, Daniel Wang, the co-founder and CEO of Taiko, a zero-knowledge roll-up platform, sees potential for ether’s price performance in 2024 in this “auspicious year full of positive energy.”

“The Year of the Dragon opens new doors for Ethereum, especially with the anticipated impact of ETFs,” he said in an interview with CoinDesk. “Ethereum is on track to achieve lower gas fees and faster transactions with the long-awaited Dencun upgrade.”

Lucy Hu, a Senior Analyst at Metalpha, adds that bitcoin’s halving and taming inflation looks promising for prices.

“Despite the crypto market currently experiencing a sell-the-news effect, the year of Dragon is on track to be one of the best performing as the inflation is now under control and the bitcoin halving event takes place later this year, which should boost the market confidence,” she wrote in a note. “We hope the fiery spirit of Dragon can lead the market to a new height that is never seen before.”

Over on the traditional finance side, CLSA said in a recent report that they predict that equity markets in the city will roar back to life in the second half of the year.

However, some market volatility is expected. “Traversing this market on the dragon’s back is anything but a smooth sailing experience,” CLSA analysts wrote. “Roller coasters are nailed to the earth, but the dragon is not.”

CLSA also reminded readers to seek professional advice, not the guidance of the stars, before investing.

Edited by Parikshit Mishra.

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