If bitcoin price stabilizes over the next two weeks, the extended bear market will cryptocurrencyCurrencies – also known as cryptocurrency winter – can end just as quickly as it started.
So says Edward Moya, senior market analyst at brokerage firm Oanda, saying: “Wall Street is benefiting from a positive risk mood, which is good news for cryptos. According to him, the cryptocurrency market is “starting to look more attractive now that the economy is looking a little better.” as the Fed has eased tightening expectations.”
Moya refers to the stock market rally in recent days and a general easing of macroeconomic fears among investors. Often a rise in stocks also leads to a rise in cryptocurrencies. He says investors are starting to become more optimistic about the economy, inflation and rising interest rates, which is a positive sign for risky assets. In general, the more confident investors have in the stock market and the general macroeconomic environment, the more risk they are willing to take.
Bitcoin surged above $23,000 on Tuesday, reaching its highest level in more than a month. Ethereum is up more than 40% in recent days and traded above $1,500 on Tuesday.
Many crypto experts we’ve spoken to over the past few months were expecting a final big dip for the cryptocurrency market, with some targeting a minimum between $10,000 and $14,000 for bitcoin. While that could still happen, Moya says that if more institutions buy in the coming weeks, it could lower bitcoin because “market positioning has become extreme.”
What is the outlook for the cryptocurrency market and how should investors react?
Less than a month ago, the crypto was in the midst of one of the worst market crashes it has ever seen. Bitcoin and Ethereum are down more than 70% since their peak last year. Multiple societyWell-known crypto firms, including hedge fund Three Arrows Capital and cryptocurrency lender Celsius, have filed for bankruptcy. The size of the industry itself had fallen below $1 trillion, a significant drop from a few months earlier when it was worth more than $3 trillion.
But investors remain hopeful that the tremors of recent weeks are coming to an end, said Marcus Sotiriou, market analyst at digital asset broker GlobalBlock. Cryptocurrency prices are rising as investors begin to become more optimistic about the cryptocurrency market, thanks in part to the recent rally in the United States, Europe and Asia, he said. Also read: After a great start, LUNA 2.0 drops 80% on the first day of sale. Cryptocurrencies, especially bitcoin, have been following the stock markets closely since the beginning of the year.
“If the market starts to react positively to negative news, it is a signal that there is a local bottom for the time being, as fear may have caused the news to be priced in,” explains Mr. Sotiriou out.
Despite the positive momentum of recent days, the cryptocurrency market is still suffering. Both bitcoin and ethererum have fallen more than 50% this year, with bitcoin posting its worst quarterly loss in more than a decade between April and June.
“We are in a full-fledged bear market, not a bear cycle. Just because we see positive price action doesn’t mean we are out of a rut,” said Wendy O., crypto expert and educator. “We are currently trading at $1,500 [pour l’ethereum], and to be super bullish on ethereum, we would need to move above $2,248. That is a pump over there with a price of 50%”.
So what does the latest crypto rally mean for investors? This should not significantly change your crypto investments or the way you invest in crypto if you are on this long-term path. Given the cryptocurrency’s history of volatility, this increase is no guarantee of a long-term reversal. Crypto prices are just as likely to fall again as they are to rise.
Since the future of cryptocurrencies will certainly be marked by increased volatility, financial advisors recommend that you allocate no more than 5% of your investment portfolio to cryptocurrencies and only invest what you are willing to lose. Always make sure your financial base is covered — from your retirement accounts to your emergency savings — before putting extra cash into a speculative asset like bitcoin or ethereum.
“We still have a long way to go before anything happens,” says O.
Be vigilant and consult your financial advisor before making any investment decision. Mirror-Mag cannot be held responsible in case of bad investments. Before using any third-party service, do your own research.