Yes, in the present time, Bitcoin and other cryptocurrencies have indeed been up-trending, but the crypto market is still lying in the danger zone.
The two largest cryptocurrencies Bitcoin and Ethereum are still placing nearly 50% below their record highs in November. Bitcoin and other cryptocurrency prices were distorted through 2022, the Bitcoin price losing almost 70% from its last year’s highest setting.
According to a survey, crypto owners expect Bitcoin to bounce back to about $38,000 before the end of 2024.
The average crypto owner remains highly hopeful that Bitcoin will rebound despite the recent price collapse. Bitcoin and crypto owners are much more optimistic about predicting the price of Bitcoin will be higher than it is.
Though the crypto industry experts have a different view on this matter investors and traders are wondering whether the crypto market will bounce back again in this current year.
Weak global signs amongst heightened inflation and interest rate hikes have led to a massive sell-off in crypto markets.
Inside the world of Cryptocurrencies
Cryptocurrencies are the digital form of money that represents financial privacy as well as freedom. Unlike traditional money, they are not issued by Central banks. They enable protected transactions free from government or other corporate influence.
Cryptocurrencies were formed during the wake of the global financial crisis when people were disappointed with the banking system.
However, during the pandemic, high liquidity and low-interest rates led to demand for riskier assets.
You can purchase the cryptocurrencies by opening an account with a crypto exchange and submitting KYC details online. The investment process is similar to buying stocks.
Most cryptocurrencies don’t have intrinsic value. The value of cryptocurrency is determined by some factors such as demand &supply, regulation, and competition. Investors and traders find it a high-risk and high-reward opportunity.
Why is the crypto market crashing?
The global crypto market is crashing again. In the last few weeks, the market cap has collapsed to $872 billion, down 3.71% over the last day.
The correlation between cryptocurrencies and the financial market is growing. Cryptos have responded to the global financial market that has also been affected due to weak global indications.
While the global crypto market cap and top cryptocurrency prices are dropping, the market volume has jumped over 3.62 indicating a sell-off by the traders.
Investors are also continuing from the riskier assets that are reflected in the stock market as well. Almost every cryptocurrency is now worth half or even less than its record highs.
As inflation going to continue for around two years, experts say that a forthcoming economic recession may continue to make crypto markets fragile.
The Federal Reserve has been hiking the interest rate to struggle with inflation over the past few months. This initiated a sell-off in risk assets including Bitcoin and other cryptos.
The rising price of gas, food, and energy is putting marvellous pressure on the crypto market as Bitcoin and Ethereum have perceived double-digit losses in the past 24 hours.
With all their uncertainties and instabilities, cryptocurrencies are considered one of the most unstable instruments for investment purposes.
Should you buy the dip at the current Bitcoin price?
If there is one thing you should be aware of about investing in crypto then it is volatile and highly changeable. Prices fluctuated by the minute driven by speculation. Experts say that now could be a good time to get into the crypto market as the prices are low but only after assessing your risk tolerance and arranging other aspects of your financial investments such as saving for an emergency, paying off high-interest debt, etc.
When it comes to your overall crypto investments, only get in what you are ok with losing. You should not invest more than 5% of your portfolio in crypto.
According to experts, Bitcoin and Ethereum are the two cryptocurrencies that represent the best starting point for new investors. Bitcoin holds the highest score among all the cryptocurrencies while Ethereum stands right behind.
What other cryptos are a good buy in June 2024?
Here’s the precise list of the five best cryptocurrency investments in June 2024
- Bitcoin: number one crypto in the market for long-term investment
- Ethereum: The most used crypto network is about to get inexpensive
- BNB: improving the most popular crypto network
- Cardano: The most protected blockchain network
- EverGrow Coin: Most used crypto for passive income
The crypto market hit its lowest market capitalization recently
The world’s largest cryptocurrency, bitcoin dived below $21,000 per coin in June 2022, falling nearly 70% from its peak price in November 2021.
The global market crypto cap falls below $1 trillion levels to $958 billion, down 6.15% over the last day. The entire volume of the crypto market over the previous 24 hours was $38.59 billion which is a decline of about 38.03%.
The dominance of bitcoin is at 42.21%, down 0.20 per cent from the preceding day. Bitcoin was mostly in green over 24 hours though it has seen a sharp fall at the time of writing this article.
The prices of bitcoin and other cryptocurrencies are continuing down around 20-40% in the past few days.
Last November crypto had breached the $3 trillion mark in market cap, and now its collapse and slipped it below the $1 trillion mark signs a massive crash of around $2 trillion in market cap in the last few months.
The continuous drop in crypto this year comes on the back of the delicate investor fear amid record inflation and the expectation of more interest rate hikes by the Federal Reserve to combat this.
Other cryptocurrencies like Ethereum, Cardano, BB, Solana, dogecoin, etc. also dropped as a broader sell-off continued.
Analysts are citing global inflation as the main reason for the meltdown
The year 2021 was the best time for crypto investors and traders. After that Bitcoin has down by over 50% from its all-time peak in November.
The second largest crypto, Ethereum has faced a similar ordeal over the past few months. One of the most obvious questions is why the market is crashing so quickly at present.
The short answer, there are some factors leading to this sudden, steep decline in the cryptocurrency market.
Part of the reason for this failure of cryptocurrencies to live up to their potential as an inflation hedge could have to do with how severe this period of economic overheating has developed.
In March 2022 the inflation rate of 8.55 % was the highest over four decades. The US Federal Reserve has been trying to fight the recession trap by hiking interest rates.
Even the stock market has dropped 20% from its recent high. It seems that the high inflation will last into 2024. Inflation has forced the Federal Reserve to reduce liquidity in the market by raising the interest rate and this is the primary reason for to fall in crypto markets.
High yields, high risk
A high-yield corporate bond is a type of corporate bond that agrees to a higher rate of interest because of a higher risk of default.
When companies with a larger estimated default risk issue bonds, they offer the investors or traders a higher rate of interest to compensate them for this higher risk.
High-yield corporate bonds are more volatile and therefore riskier than government-issued bonds.
Some investors and traders with a greater risk tolerance may find high-yield corporate bonds are more attractive and profitable in the low-interest rate environment.
FAQ:
Will crypto recover?
Ans: the recent rise in crypto in mid-July could indicate a slow turning of the bear market; and also indicate a crypto recovery in the prospect. While no one knows for sure, some experts state that crypto prices may fall even further before any constant recovery.
Should I sell my crypto?
If the price has slipped and you no longer think that cryptocurrency is not a good investment then you should sell. It is suggested that when a cryptocurrency is at a high price you should buy the crypto on the other hand when the price has fallen and you do not want to invest in riskier assets then you should sell it.
How long should I hold crypto?
Ans: You can promote the strategy to hold an asset long term rather than attempting to run for the short term. Long-term investors hold their investments for several years or periods to raise their return. If you hold the virtual currency for 5-6 years then you will have a long-term capital gain or loss.
Is it a good time to buy crypto?
Ans: Experts say that now could be a great time to get into the crypto market as the prices are low. But only after assessing your risk tolerance, you should invest in long-term crypto. Cryptocurrency is a great investment with high returns overnight though there a considerable shortcomings too.
Conclusion:
We have seen several crypto crashes in the preceding years. In fact, in 2014, bitcoin’s price collapsed, and again in 2018 bitcoin’s price slipped 80% as hundreds of “initial cash offerings” crashed and burned. In both cases, the market price again rose higher than before.
But this time is different, driven by the pandemic and war, a new macroeconomic standard is forming. As the high inflation has back after 30 30-year gap, it approaches a much tighter monetary policy. The interest rates are rising and central banks across the world are burning money. That will mean constantly lower prices for cryptocurrencies.
Bitcoin was originally intended to replace the dollar; some investors still think it eventually will. It is the best period to buy and hold the world’s future currency at the time of the beginning of inflation. Analysts say most of the factors of crypto crashing are macro which means they relate to the economy as a whole rather than any flaws in the crypto market.
