Cryptocurrencies are skyrocketing. More expensive Bitcoin can be a trap

More expensive Bitcoin

Bitcoin attracts investors around $21,000, despite trading at $17,500 a week ago. Ethereum rallied to nearly 1,600 during the same period 1.3. Solana cryptocurrency is up more than 50% since the beginning of January. FOMO (fear) can play a big role in increasing the price of a “coin” – we buy because others are buying, while we fear that without doing so, the price will become zero. Acceptable. . making it a safe investment to visit.

According to the survey results of the popular news site Cointelegraph, many crypto market participants are skeptical about the trend observed in the first half of January. More than 61 percent of the more than 6,000 voters cast their ballots. Treat the current price level as a bull trap. Only 39% see the new event as the start of a new bull run.

Fear of being abandoned

Bitcoin’s January gain is almost identical to the 30% gain it recorded in 2020 before the pandemic. Bitcoin briefly dipped below $21,000 after approaching technical resistance at $21,473 on Friday. According to technical analysts, if the “bulls” do not have enough resistance, the price is at risk of returning to the psychological support level of $20,000.
The world’s oldest and largest cryptocurrency by market capitalization will continue to list from November, a day before the famous bankruptcy of FTX exchange Sam Bankman-Fried. However, the possibility that there could be further shocks in the cryptocurrency industry cannot be ruled out. If crypto broker Genesis and its parent company Digital Currency Group are trying to pay off their huge debts.

READ MORE:   Former senior political advisor of Liaoning stands trial for graft

Noelle Acheson writes in the Crypto Is Macro Now newsletter: “Despite a lot of uncertainty surrounding digital assets, FOMO plays an important role in the development of the market.” FOMO, or fear of missing out, is when we buy because others are buying.

Experts disagree

Bitcoin price predictions, as usual, vary widely. “We view the current rally in digital assets as a trend reversal rather than a market correction,” said Mark Connors, research director at Canadian crypto firm 3iQ. bear market”. However, many analysts say that 2023 will be a time of caution. They expect the Bitcoin price to be volatile and within a certain range. It is also vulnerable to macroeconomic developments such as rising interest rates. According to him, the time is not yet for a new “bull market” and we will not return to the highs of $69,000 by November 2021.
“Bitcoin may fall, but it could drop to $12,000 before it rises again,” crypto veteran and venture capitalist Bill Tye told CNBC last week.
According to Meltem Demirors, chief strategy officer at CoinShares, the bitcoin price could be between $15-20,000 and eventually $25,000-30,000. Anthony Scaramucci, founder of SkyBridge Capital, calls 2023 the year of Bitcoin’s “Revival” and predicts that it will reach $50,000 to $100,000 within two to three years.

Not just bitcoins

Recently, not only Bitcoin, but a broader digital asset ecosystem has emerged. The rapid growth in the capitalization of the entire market is the best proof of the growing interest of investors in cryptocurrencies. It was less than $850 billion at the beginning of the year, but is now over $1 trillion. Ethereum, the second-largest digital currency by market capitalization, is back around $1,600 for the first time since November 2022, rising steadily over the past two weeks. However, “Ether” is still slightly below the October/November 2022 resistance area. Solana cryptocurrency, dubbed the “Ethereum killer“, has become very expensive. After falling more than 80% in 2022, Solana began experiencing her second age at the start of the year. Prices have more than doubled in January. In addition, the trading volume is the largest since the collapse of crypto exchange FTX last fall, which caused the collapse of most cryptocurrencies. Solana is the undisputed leader among the top 20 altcoins by revenue over the past 30 days. Many economists point out that the crypto price hike in January was partly a result of the market “bet” that the Federal Reserve would announce the end of the rate hike. The result of this speculation is not only an increase in the price of “coins”, but also stocks and gold. Investors are now wondering if all of those assets are growing too quickly, as central banks like the Federal Reserve have vowed to keep interest rates low until inflation is high. be remedied. In other words, the hope that the Fed can control inflation without pushing the US economy into a recession may be futile.

READ MORE:   Celebrating 14 years of Genesis block mining

Bitcoin up to half

It is not only the state of the global economy and currency that affects the price of Bitcoin. Last fall, the founder of Morgan Creek Capital Management, Mark Yusko, predicted that the crypto chart bull run would begin in the second quarter of 2023 and would halve. An eruption occurs every 4 years on average. It includes limiting the supply of new bitcoins and halving the rewards for miners for mining “money”. Major cryptocurrencies have experienced three halvings – the most recent being in May 2020. According to Marek Yusko and many other experts, there will be another crypto boom before the next half of the year, which is expected to happen in the first month of 2024. , culminating in a year after that. . During the first three cycles, the decline is rapid and increases each time. Bitcoin price has dropped 80%. A “crypto winter” occurs between the temporary halves. Mark Yusko predicts that if the reward for mining a Bitcoin block and adding it to the chain is halved, then the price of the cryptocurrency will have to at least double for mining to remain profitable.