Will bitcoin recover? ‘When in doubt, zoom out’, crypto market analysts advise

The price of bitcoin is up 7 per cent on Monday, but down 7 per cent since the weekend. Week-on-week, it is down more than 20 per cent, but year-on-year it is up nearly 400 per cent.

Extending the timeframe even further, bitcoin is up more than 10,000 per cent from five years ago and 500,000 per cent since 2011.

Besides demonstrating bitcoin’s notorious volatility, these price movements have led some crypto market analysts to encourage investors, who may be alarmed by the latest price crash, to “zoom out”.

The cryptocurrency may have lost a third of its value since its record peak in mid-April, but similar price dips were seen during previous bull runs in 2013 and 2017.

Repeating patterns mean some experts are even claiming that bitcoin is still on track to hit new all-time highs in the coming months.

“At this rate of fall, bitcoin is likely to see support at $40,000 if the selling continues, and surviving this fundamental onslaught can set a new run that will create a new all-time high of $70,000 in the mid-to-long term,” said Alexander Vasiliev, co-founder of global payment network Mercuryo.

It is too early to tell whether bitcoin’s current collapse is the end of the 2020/21 bull run, or whether it is just a dip on the way to even greater gains, but the last time the price of bitcoin fell as low as $45,000, it bounced back above $60,000 within two weeks.

A recent poll of academics and cryptocurrency industry figures found that more than 95 per cent of them believed the price rally would continue until at least July, with two thirds predicting bitcoin would not peak until after October 2021.

Read More   Bitcoin Price Continues To Soar As Cryptocurrency Market Approached $190 Billion - NullTX

Others have warned that the latest price crash is proof that cryptocurrencies are too risky an investment.

Kevin Brown, a savings and investment specialist at Scottish Friendly, claims that investing in bitcoin or any other crypto assets is “pure speculation” and a “zero sum game” for anyone who doesn’t understand how the market works.

“The level of volatility means that savers who choose to invest in cryptocurrencies must be prepared to lose all their money,” he said. “At least when you are at the bookies you have a real chance of understanding the outcome and probabilities if you know the horses or football.”

Part of the reason for the latest price plunge was Tesla announcing that it would no longer be accepting payments in bitcoin, citing environmental concerns.

Crypto investors have criticised Tesla CEO Elon Musk for his market-moving comments, despite the price still being up since he first announced that the electric car maker would introduce crypto payments earlier this year.

Musk was even forced to counter rumours on Monday that Tesla had sold all of its crypto holdings. “To clarify speculation, Tesla has not sold any bitcoin,” he tweeted.

This is an important distinction, as it suggests that Tesla still considers bitcoin to be a legitimate store of value, even if its credentials fail to meet its expectations as a form of currency.

Bitcoin’s growing reputation as a form of “digital gold” has been the main driver behind the massive increase in institutional and retail investment over the last year, and many of the largest holders appear to be in it for the long-haul.

Read More   Bitcoin Thanksgiving surge no more as price drops 7 percent - Yahoo Finance

Blockchain records show that a number of so-called “whales” have continued to bolster their investment by buying the price dips, while Tesla also previously stated that it would be holding any bitcoin acquired through sales as cryptocurrency rather than exchanging it to fiat currency.

“Once the dust settles and the emotions subside, we’ll all remember that Tesla is still holding onto its pile of bitcoin,” said Antoni Trenchev, managing partner of digital asset manager Nexo.

“Call it consolidation or accumulation, bitcoin is getting comfortable and readying itself for the next move up towards the next key figure of $75,000.”


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.