– BTC eased from 18-month low
– Altcoins are rallying more
– The crypto market stabilizes after a tumultuous week
– Despite a bear market, a slight rally reflects continued optimism in the long-term value of digital assets
Mumbai: Even though the price of cryptocurrencies continues to crash, investors find themselves in a bind.
Bitcoin (BTC) was trading at around $44,000 at the start of March and has now fallen to around $20,000. Not to mention that the ATH of BTC is $69,045. Bizz Buzz interacted with a galaxy of stakeholders to understand the reason behind this and the way forward.
Hoping to dampen inflation, the US Federal Reserve raised benchmark interest rates by 0.75%, the highest in 28 years, sparking fears of its wider global ramifications. Bitcoin rebounded shortly after the announcement, surpassing the $21,000 mark and solidifying its position as a notable asset to hedge against periods of uncertainty. Noting some recovery in the world’s largest cryptocurrency, BTC fell from an 18-month low as Altcoins rally and the crypto market stabilizes after a tumultuous week. Despite the bear market, the slight recovery speaks to continued optimism in the long-term value of digital assets, according to a report by the CoinDCX research team.
There are many reasons that are responsible for the fall of cryptocurrency.
Avinash Shekhar, CEO of ZebPay, said: “Bitcoin’s crash to less than a third of its ATH was caused by multiple factors, including rising global inflation, planned Fed rate hikes in United States and the Continuing Ukraine-Russia Conflict.”
The Terra-Luna crash followed by more recent issues at crypto hedge fund, Three Arrows Capital and Celcius, a hugely popular crypto lending platform, also had a negative impact on market sentiment. In the face of uncertainty, investors are moving cautiously through financial markets, with high-risk instruments taking the brunt, he said.
The immediate trigger for the crypto’s slide appears to be a sell-off by investors amid inflation fears and the suspension of withdrawal by crypto lending service Celsius. To add to that, this is the first time since July 2021 that Bitcoin has traded below $30,000 and is down nearly 56% from its November high of last year. Global financial markets are being battered by rising inflation, growing tensions between Russia and Ukraine and uncertainty in Sri Lanka. The Rupee’s drop to an all-time high will also add to a significant impact on the financial markets and thus put enormous pressure on the crypto market as they struggle to diversify and hedge their investments. Raj Kapoor, Chief Advisor, eCryptoverse, says: “I see more pain ahead for the crypto markets, although this will ultimately be a great buying opportunity for investors who take a long view of the markets because that Bitcoin’s long-term fundamentals are in place.”
Because, if you look at it, at an all-time high of 0.8%, the co-relationship with BTC USD stocks is a positive co-relationship and would ease the fears of crypto investors. No immediate glimmer of hope but long-term prospects are coming, he added.
Analysts believe that while the entire global market is crashing and a downtrend is underway, a similar move has been seen in the crypto industry. Bitcoin is continuously dipping and has reached a weekly moving average of 200, if this zone is maintained for a period of time, we might see a short period but a nice upward move. Assuming a crash at some level or $12,000 will be unwise for now, as bitcoin has a good support level of $20,000 which is also the all-time high of 2018 and $18,000 is a good support zone or we can say an accumulation zone.
Manoj Dalmia, founder and director of the Proaasetz exchange, said: “If a weekly close holds this level, we can see an upward move to $25,000. Although a resistance of $29,000 is important and that a breakout in volume could lead to $35,000. The exact bottom cannot be predicted as the support areas are strong.”
The Bitcoin movement cycle is very interesting because for the past 12 years it has always hit a strong ATH mark after creating a bottom. From almost $0 (founding day) to $68,000, BItcoin’s cycle has touched both low and high every year and interestingly, the low is always the last ATH cycle, a-t- he declares.
The year 2022 has not been a good year for crypto assets as investors saw sharp profits after a solid rise in 2021. Adding to pain for investors, rising inflation, monetary tightening from the central bank, fears of impending recessions have shaken sentiment the most. Terra’s LUNA debacle and large institutional selloffs were the other main reasons for the crypto selloff.
Advising investors, Kunal Jagdale, Founder and CEO, BitsAir Exchange says, “In such markets, it is more important to know what not to avoid. So, stay away from junk tokens and avoid any position Investors should hold their positions in quality tokens and average their cost for long-term gains.This is a prudent approach because cryptos are here to stay.
Moreover, cryptos have outperformed with big margins after every bull market. So, smart investors should use their skills and wisdom to make the most of it, he added.
This market has taught all investors the importance of quality. So stick with it. If possible, avoid making new investments and eliminate waste from your holdings. Stick to the big names and chase the cost-to-cost average (DCA).
According to Jagdale, “Avoid taking leveraged positions as their winter is long. Don’t buy the tokens on the buzz. Avoid market FUD and FOMO. Once things improve, the crypto market will come back on the road to outperformance”.
At this point, Shekhar says, caution is in order. Those who invest in projects and protocols that have strong use cases need not panic because the markets will eventually rebound. Investing smartly through proper research, averaging rupee costs and diversifying your portfolio will help you reduce risk and make the most of this market cycle.
Global financial markets are experiencing a universally coordinated downturn. While it’s hard to predict how long this will continue, we are bullish on Bitcoin and crypto over the long term. The pace of innovation in the category hasn’t slowed and the growing money market use cases combined with growing mass adoption globally clearly indicate the category’s scope for future growth.