In the crypto world, a downtrend that lasts for more than a month is called “winter”. So far there have been five of them, between 2017 and 2021. In particular, during 2021, they lasted between 14 and 10 weeks and caused Bitcoin to lose between 45% and 47%.
So far it has fallen 36% in eight weeks and if this trend is confirmed, it still has a long way to go.
“Bitcoin just isn’t attractive to retail investors right now. No one really sees that 10x potential for Bitcoin,” said Joseph Edwards, head of financial strategy at fund management firm Solrise Finance.
a difficult context
Since inflation has skyrocketed as a global phenomenon, the main central banks must decide what monetary policy they will adopt to try to curb it.
The rise in interest rates directly affects certain productive sectors, such as the technology companies that make up the Nasdaq, and the crypto world and this index are increasingly more correlated.
If US stocks confirm a bear market, cryptocurrencies are no longer on the buy list.
Does it affect all cryptocurrencies equally? apparently not. Bitcoin’s dominance, or the ratio of its market capitalization to that of other cryptocurrencies, jumped to a seven-month high of more than 44%, despite the price decline.
What happened was that investors massively fled from altcoins, such as “stablecoins” or stable cryptocurrencies, which were called into question after the collapse of TerraUSD in early May.
“Institutional investors, in particular, are fleeing to the safety, to some extent, of Bitcoinwhich has the highest institutional buy-in,” said Marcus Sotiriou, an analyst at UK-based asset broker GlobalBlock.
Last week, Bitcoin futures saw their largest net long position since the contract was launched in 2018, CFTC data showed, indicating that traders are adding to their positions for an eventual upside in the cryptocurrency’s price.
What will happen to the price of Bitcoin and Ethereum in the long term?
From its maximum on November 10, 2021, the BTC lost half of its value. The historic maximum was $69,000. This week, he hovers around $30,000, having hit a 17-month low of $25,401 on May 12.
Data platform Coinglass’s Bitcoin Fear & Greed index of market sentiment – where 0 indicates extreme fear and 100 indicates extreme greed – is hovering around 13.
For its part, Ethereum has been fluctuating around $2,000, down 60% from its high of $4,868 on November 10. Bilal Hafeez, CEO of research firm Macro Hive, said “$2,300 and $2,500 are key levels.”
And he said that not holding above any of those marks in the short term would be a bearish sign.
“A lot of people wonder what they should do with their coins: keep holding on for life or book the losses and move on?” said Lindsey Bell, chief money and markets strategist at Ally Invest, adding: “It’s a good reminder of that crypto should probably be no more than, say, 1-2% of your portfolio.”
Source: Ambito
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