Here’s a quick reminder – In November 2021, Bitcoin was trading at its all-time high at nearly $70,000 per coin. Back then, there was a feeling that it was a matter of time until Bitcoin will reach 100K and even higher. Further, the fact that Bitcoin was also perceived as the new digital gold that can be used as a safe haven asset increased investors’ confidence in the most popular digital asset in the world. Just a few months ago, things looked bright for Bitcoin and its investors.
But, predictions and reality have not matched up this time. The only question that remains open is whether bitcoin can bounce back up again.
What happened to Bitcoin lately?
In some ways, buying bitcoin is like buying any other tech stock: it’s a wager on the likelihood of more technological disruption. In addition to expanding economy stifling post-pestilence growth on both sides of the Pacific and a continuous suspicion that extravagant confidence had led to an overestimation of Information Technology in general in recent years, the entire sector started to topple.
The dam finally burst in early May. It fell more in a week than it had in the previous month. Contagion from the flu was the immediate cause. From the disastrous failure of another cryptocurrency project, terra, which had a market cap of more than $50 billion but finished the week practically worthless. Other coins followed Terra’s demise.
Stockholders were concerned that similar enterprises would follow; finally, panic gripped the bigger sector, and even leading tokens as bitcoin dropped.
The cryptocurrency market has taken a beating recently. Bitcoin and many of its peers have been struggling to stay above specific price levels since the middle of April. BTC – the world’s largest and most popular digital currency by market cap – has plummeted below $30 once again at the time of writing, sending many analysts and traders into a panic after trading around $22,000.
Each of these people has a new source of concern. The stock market continues to plummet into the depths of despair. Several analysts believe the correlation between stocks and bitcoin will become more pronounced in the next weeks and months, causing the crypto market to lose even more ground.
The basic line is that 2022 is shaping up to be a carbon copy of 2018, which was previously regarded as one of the worst years for the digital currency business, and things may deteriorate before they bounce back again.
Bitcoin price analysis – can it bounce back?
Several investors have expressed mixed emotions about this.
Up to $1 trillion in total has been removed from the crypto landscape. In a recent interview, Sam Kopelman, the UK manager of bitcoin and crypto exchange Luno, highlighted that bitcoin is gaining traction, given that the recent collapse of Terra — an ostensibly solid coin – has caused many traders to fear the altcoin market. As a result, despite its price fluctuations, bitcoin remains significantly more stable and comfy, and investors are flocking to the crypto industry’s flagship coin.
According to him, the market is still fearful as a result of the de-pegging of collapsed stable coin UST and fear spillover from the larger market. What’s more, the fear in the crypto markets is driving capital away from altcoins and into bitcoin, a sign of the coin’s relative strength in comparison to others.
FX Pro’s senior market analyst, Alex Kuptsikevich, commented that the panic sell-off in the markets, combined with the persistence of investor anxiety, heralds the approach of a panic peak. The overall negative market sentiment has kept the bulls at bay. So far, it has been difficult to discern reliable signs of oversold or rebound formation. He said we should expect the cryptocurrency market to test support at last week’s lows again in the near term. We consider the area near $20,000 to be the final target for a potential selloff, as it corresponds to bitcoin’s long-term support line.
Overall, he believes bitcoin could fall another $9 or $10K in the coming weeks before finding a bottom level.
Despite everyone writing it off, Bitcoin and the rest of the crypto market are known for their ability to overcome any challenges and make strong comebacks. Several financial experts have predicted that the Bitcoin bubble will burst “in the near future.” One factor that may give crypto investors hope is that big players are beginning to join the party and that Bitcoin could be a legitimate currency in the future, regardless of its price.
Nonetheless, in the near future, Bitcoin is not likely to rise again. However, once the stock market will find a bottom and central banks will raise interest rates, Bitcoin could be an attractive asset, especially with the rising inflation. Or more accurately, Stagflation.
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