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Bitcoin and Ethereum have been boring lately.
Considering 15% daily swings are the norm in the cryptocurrency market, prices haven’t moved much in recent days, with bitcoin holding steady near the $19,000-$20,000 range. and Ethereum floating around $1,100. See also: Tezos is preparing its One of One event dedicated to NFTs . The two biggest cryptocurrencies seem to be treading water around their current price levels, with no clear direction in sight.
“At this point, $19,000 to $20,000 are simply past highs from the last major bull market of 2017,” says Stéphane Ouellette, CFA and founder of FRNT Financial, an institutional capital markets and advisory platform focused on investors. digital assets. In other words, it’s hard to predict what will happen next and when. “The curves for bitcoin and ethereum futures are completely flat, implying that the market is also completely uncertain of the future direction,” he says.
Still, the crypto market remains under intense pressure, with the possibility looming of another pullback. Whether bitcoin declines in the coming weeks or months will depend on “whether the stock market has bottomed out and no major cryptocurrency companies go into liquidation,” according to Edward Moya, senior market analyst at OANDA, a brokerage firm.
“A plethora of bearish crypto stocks continues to pull bitcoin lower, below key technical levels. Sentiment will take some time to improve, especially after many early crypto deals fall apart,” says Moya, referring to crypto exchange eToro which ditched a deal to go public via a SPAC merger. , while many struggling companies like BlockFi and Voyager scramble to find deals to stay afloat.
What’s going on with cryptocurrency prices and what does this mean for investors?
On Wednesday, bitcoin is up nearly 2.5% in the past 24 hours, trading near $20,000. Ethereum price has held near $1,100, up 3% in the past 24 hours. Read also: ALGO prepares a bullish reversal and aims to expand the derivatives market. . Although the two biggest cryptos have seen a small rebound in the last day, experts say that we are not yet out of the danger zone.
Bitcoin and Ethereum have lost more than two-thirds of their value since last November, and experts predict that cryptocurrency prices could fall even further now that the price of bitcoin has dipped below $20,000 on several occasions. those last weeks. On top of that, investors still feel uncertainty about current economic conditions like runaway inflation, a potential US recession, rising interest rates, and a shaky stock market.
“Bitcoin is stuck in its current trading range due to ‘nervousness’ among market participants,” says Joshua Fernando, CEO of eCarbon. “They have seen wild swings over the past few months that have devastated the market, so it is reasonable that they are now trading cautiously. »
Martin Hiesboeck, head of blockchain and cryptocurrency research at Uphold, believes bitcoin isn’t moving much below or above the $20,000 level due to “lack of stimulus.”
“There is no doubt that the market expects macro news and less geopolitical tension – the war in Ukraine, the specter of inflation and a possible recession being by far the biggest worries,” he said.
So what should cryptocurrency investors do in light of this situation? Nothing, according to experts. If you’ve been investing in crypto for the long term using a buy and hold strategy, price fluctuations are to be expected and big dips are nothing to worry about too much.
Experts recommend limiting your cryptocurrency investments to less than 5% of your portfolio, as long as your cryptocurrency investments don’t get in the way of your other financial goals. Before investing in cryptocurrencies, always prioritize saving for emergencies, paying off high-interest debt, and contributing to a traditional retirement plan. If you’re in a good financial position and ready to enter the market, experts say now might be a good time to buy bitcoin or ethereum while prices are low, while keeping mind that prices could fall further.
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Perhaps like stocks, investors have gotten a little carried away by the buy-all frenzy of 2021 and are sitting on the sidelines waiting for signs that balance has been restored and the bull market is back in motion,” says Fernando.