The recent events in the crypto world left numerous investors in a severe dilemma. Bitcoin, which is the most traded cryptocurrency, started a downward slide in November 2021, after climbing to an all-time high of $69,000 within same time. When the bitcoin downward slide began, a lot of investors and market players who trade with eToro and plus500 felt that it was the usual price movement volatility. Unfortunately, they were unprepared for what followed the downward trend.
Still, after falling to its lowest in over eight months on Monday, trading as low as $32,983, Bitcoin seems to have begun a positive upward trend. The largest cryptocurrency by market capitalization was up 6.6% in the late hours of Tuesday evening, trading to $37,183 as other equities also ended the day on a high. This stability of Bitcoin price indicates that after the fall, Bitcoin is on its way to rebound and reclaim its exalted position in the world of cryptocurrency according to the projections of cryptocurrency experts.
This is a positive suggestion for crypto investors especially those who trade Bitcoin, they’re originally bothered by what appeared to be a endless fall of Bitcoin given the unwelcoming postures of some governments around the globe.
Brad Bechtel, global head of FX at Jefferies; posits that Bitcoin tumbled because of “some countries like Turkey talking about banning Bitcoin as a payment methodology and also talk of further scrutiny by the US Treasury,” said.
The crypto market is also getting more crowded: China is creating a digital yuan and is toying with the idea of rolling out the currency at the 2022 Beijing Winter Olympics. Meanwhile, the Bank of England announced the creation of a Central Bank Digital Currency as well as a task force to explore its uses.
“Big Tech is also developing their own versions of cryptocurrencies,” said analysts at Action Economics in a note to clients. “All this represents significant future competition for the likes of bitcoin.” At the same time, the cryptocurrency still has plenitude of bullish backers.
“We don’t think any of these factors change the fundamental story for Bitcoin which still seems supported by constrained supply and broadening institutional and retail investor adoption,” wrote Win Thin, global head of currency strategy at Brown Brothers Harriman, in a note.
What About Other Cryptocurrencies?
Along with bitcoin, other crypto-assets experienced a bit of a push within the last 24 hours. Ether, which plunged as low as $2,176, its lowest in 8 months according to Coin metrics. The second-largest cryptocurrency has now risen by 1.1% in the last 24hours, which leaves it trading at $2,444. Both bitcoin and Ether have now dropped by 45% and 49% from their respective all-time highs.
Generally, cryptocurrencies seem to be working in tandem with stocks which have continued to fall since the beginning of the year. In fact, these stocks just came off their last week since March 2020 last year. Investors are preparing for tighter monetary policies from the Federal Reserve. To this end, they have now started selling risk assets like technology stocks.
Bitcoin Regulation Concerns
Juthica Chou, head of OTP options trading at Kraken says that it is possible that the Macroeconomic concerns, such as the U.S Federal Government’s response to inflation have facilitated the occurrence of less risky activities in many of the financial markets.
Juthica went on to say that the high volatility of bitcoin coupled with the recent price drop, will likely lead to further selling as traders and holders look to reduce risk.
Investors are also assessing the situation and are becoming more weary of the impact the further regulation of the crypto market will bring. Just last week, Russia added to the list of countries that have decided to ban the mining of digital currencies, especially Bitcoin.
Luno’s vice president of corporate development and international expansion, Vijay Ayyar, stated in an interview that given the current sentiments, bitcoin is likely to hit the $30,000-$32,000 range. He went on to speculate that if Bitcoin holds above $30,000 for as long as a week, a base will be formed at that level before the cryptocurrency can go higher. This base formation gives bitcoin enough time to go bullish, given the drop in investors confidence.
Bitcoin Days Ahead According To Experts
A lot of analysts have come out to say that they anticipate $30,000 to be the new support for Bitcoin. However, a 22V research analyst, John Roque, says that Bitcoin is not done falling, he expects the coin to fall further. He also stated that he has consistently maintained $30,000 as a target but noted the median historical bear market for Bitcoin is down by 78%.
Numerous investors are battling inflation along with this sensitive market. Bitcoin enthusiasts have long suggested that the coin is a hedge against inflation. However, this proposition is yet to be proven.
While it is true that Bitcoin has lost about 45% of its value from its record high in November, this did not dampen retail investors’ interests, as they expect the price to bounce back and are “buying the dip,” a new study finds.
Roughly 21% of U.S. adults surveyed by data intelligence provider Morning Consult were considering buying bitcoin BTCUSD, -0.57% as of Jan. 24, when the cryptocurrency traded at as low as $32,983, according to a Tuesday report. The rate is unchanged from that at the beginning of November, when bitcoin climbed to its all-time high of $68,991, the report shows.
“That means consumers have so far proved less nervous about bitcoin’s price drop this time around compared with last summer, when its price declined,” Charlotte Principato, managing director at Morning Consult wrote in the report. During bitcoin’s last selloff, the share of U.S. adults who were considering purchasing the crypto declined to 13% in July from 17% in May, the surveyed found.
Despite the recent downturn, bitcoin owners on the average expect the crypto’s price to rise to around $55,223 in six months, consistent with the report. People who hold quite $500 in bitcoin are the foremost bullish, expecting the crypto to climb to $62,439 within the next six months. In contrast, U.S. adults, on the average , including those that don’t own the digital asset, believe that bitcoin’s price are going to be at around $27,136 for an equivalent period.
In fact, most buyers invest in bitcoin because they think the price will rise, not because they believe in the technology or promise of digital assets, with 70% of those surveyed citing “making money” as their major reason for investing, the study found.
Generally speaking, bitcoin investors tend to be more tolerant to risk, and are fourfold more likely to simply accept financial risks than the overall population, consistent with Morning Consults’s report.
It is true that BTC/USD fell 9% to 43,486, but the favoured crypto will “bounce back from today’s low points thanks to wider adoption,” Brad Yasar, CEO of EQIFI, said in an email on Monday.“The widespread adoption … could see BTC hit $100,000 in 2022, or may be early as November 2021 if there is a rally,” Yasar added.
The bullish remarks on BTC come as the crypto market has been caught up in risk-off sentiment as investors hit pause on risky assets amid growing fears over a credit crunch in China.
China Evergrande Group, the second largest property company in China, has more than $300 billion in liabilities, and reports suggest it won’t hit an interest payment deadline on its offshore bonds due Thursday.
As real estate sector is a key component of the nation’s economy, investors are growing increasingly concerned about a wider liquidity crisis could hamper the China, and the global economic growth.
Despite this backdrop, there is reason for optimism amid signs of improving fundamentals on the Bitcoin network, or blockchain.“Bitcoin price action, and on-chain investor responses appear relatively robust,” Glassnode wrote in its weekly on-chain report.
“Overall exchange balances have continued to decline this week, reaching a new multi-year low of 13.0% of circulating supply this week,” it added. “Supporting this observation, is a deeply negative (outflows) exchange net-flow reading this week, with current BTC outflows occurring at a rate of -92k BTC/month.”
Rising outflows from bitcoin exchanges, often serves a bullish indicator of demand showing that an increasing number of investors are moving their coins off exchanges to private wallets to hold bitcoin for the long haul.