Bitcoin investors are finally getting some relief.
The price of the cryptocurrency rose this week to around $24,000, a price that investors have not seen since mid-June. Although still a long way from its high of $68,000 last November, this is a significant uptick even from last week when bitcoin was around $19,000 per coin.
Reading: Will bitcoin crash again
Cryptocurrency is a risky and volatile asset, and its price movements are anything but predictable. While some believe that bitcoin can serve as a hedge against inflation and stock market sell-offs, the latest bitcoin price drop shows that the digital asset is not immune to the downturn that financial markets are experiencing in general, as that investors face rising interest rates.
But could bitcoin’s rally mean that the price of the cryptocurrency has bottomed out and is on the road to recovery? here’s what the experts say.
bitcoin prices may have already bottomed out
The crypto market is not only dealing with changes in the Federal Reserve’s economic policy, but also with an erosion of confidence. In May, the Luna crypto and its associated Terra “stablecoin” crashed, wiping out billions of dollars. More recently, cryptocurrency lenders like celsius, babel, and vauld paused user withdrawals amid volatile market conditions, and celsius, voyager digital (another crypto firm), and cryptocurrency hedge fund three arrows filed for bankruptcy. bankruptcy.
With those events still only in the recent rearview mirror, and cryptocurrency prices being so unpredictable, it’s impossible to know where the market is headed. but some believe things are looking up.
alex tapscott, managing director of ninepoint partners digital assets group, says it appears the markets have finally digested risks like three arrow going bankrupt and any fallout from troubled crypto lenders like voyager.
“There is a growing sense that the ‘last shoe’ should no longer be dropped and now is a good time to increase risk,” tapscott told money by email.
There is a light at the end of the tunnel, he adds.
edward moya, senior market analyst at multi-asset broker oanda, agrees.
“Crypto pessimism is showing some signs of exhaustion,” says Moya. “When you combine that with a pullback in the dollar and increased appetite for risky assets, it starts to look like bitcoin has bottomed out.”
but expect more volatility in the crypto market
Investors should continue to expect more volatility in the cryptocurrency market, says Adam Grealish, chief investment officer at fintech firm Altruist.
Bitcoin has proven to be a roller coaster over and over again. For years, bitcoin was worth less than $1,000 per coin. then, in 2017, it rose to $20,000 per coin, before plummeting to under $5,000 in 2018. It once again skyrocketed in 2021, along with a massive surge in the crypto market as a whole.
Investors should not expect the market to turn fully bullish, longtime cryptocurrency investor and consultant eloisa marchesoni told money via email. She adds that investors should have exit strategies that reflect their relationship to risk.
Financial advisors tend to recommend that investors with a long-term focus keep investments in risky assets like cryptocurrencies to a small fraction of their overall portfolios; think between 2% and 5%. the idea is that cryptocurrencies and other risky assets should be viewed as something you’ll hold onto over time, not something you’ll panic sell when you worry about the price falling.
ben weiss, CEO and co-founder of bitcoin ATM company coinflip, is optimistic about the future of cryptocurrencies, but says investors really should follow the basics of investing like they would stocks or bonds .
“Never invest more than you’re willing to lose,” says Weiss.
sees people getting burned out on crypto by giving in to the fear of missing out. they throw money at the cryptocurrency market because of fomo, and then end up having to sell at a loss.
“Unless you’re willing to take a long-term bet and hold the crypto for more than a year, maybe even a couple, I think you need to exercise a lot of caution,” adds Weiss.
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