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The price of Bitcoin (BTC) has dropped dramatically in recent months due to significant turbulence in cryptocurrency markets. BTC is currently trading at around $22,000 as of this writing.
Ethereum, the leading altcoin, has dropped nearly 9% in the last few days. The excitement surrounding Ethereum’s upgrade, known as the “merge,” has waned, while concerns about the Federal Reserve’s upcoming rate hike have risen. You can use an advanced and high-tech trading robot at Bitcoin Loophole
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Bitcoin Resistance Points
Bitcoin started trading lower from the range it held in mid-May, falling to a 52-week low of $17,708 on June 18. The drop came from reports that several cryptocurrency companies were experiencing liquidity issues.
Bitcoin prices have fallen nearly 56% year to date, trading well below their all-time peaks of around $69,000 in November 2021. According to experts, BTC is no longer regarded as an inflation hedge, trading in lockstep with equities, which are also in decline. In mid-June, Celsius, a decentralized finance (Defi) platform and one of the largest cryptocurrency lenders, was a significant source of negative Bitcoin market sentiment.
Bitcoin Has Had a Rough Year
Bitcoin gained nearly 70% by the end of 2021. That’s an incredible return for any asset class. Nonetheless, after accumulating more than 300 percent in the lockdown-ravaged year 2020, a 70 percent annual return represents a drop for Bitcoin.
Investors are risk-averse in 2022, with “a general flight to safety across the board in most asset classes,” according to Alex Reffett, co-founder of wealth management firm East Paces Group. “Investors have shown a greater interest in value-based investments and less in speculative stocks and alternative store of value investments as a group.”
Bitcoin is a Risk Asset
Risk assets are investments subject to significant volatility in the ordinary course of the market. Stocks, commodities, high-yield bonds, currencies, and Bitcoin are risk assets because their prices frequently fluctuate under almost any market conditions.
Many people thought Bitcoin was a haven from the fluctuations in the value of risk assets. That is no longer true. Today, economic phenomena such as inflation, stock markets, and Federal Reserve monetary policy influence Bitcoin and the broader crypto market.
According to Richard Smith, author of the Risk Rituals Newsletter, this year’s decline is due to a shift in market narratives from risk-on to risk-off.
Bear markets are nothing new to seasoned Bitcoin traders. During the 2017-2018 period, the price of Bitcoin fell by more than 80%. But that was before significant corporations like Fidelity and PayPal poured billions of dollars into the cryptocurrency market.
New crypto owners should understand how courage it takes to stick with Bitcoin over time.
Should You Buy Bitcoin Even With the Fluctuations?
Bitcoin’s value has increased significantly in the past years to $22,000 from the $17,000 low mark it hit this year. And this is a relief to many investors and a sign of hope for those planning to invest. Many people wonder whether it is still a good idea to buy Bitcoin now with its volatility.
Experts advise that now could be an excellent time to buy Bitcoin. Trading Bitcoin is a lucrative investment that one can indulge in and take advantage of the volatility.
Although there are many reports on Bitcoin prices and the best time to invest, it is crucial to analyze yourself and the risk you are willing to take to diversify your investment portfolio. Do your research and see if it’s a good time to invest, as my experts say.
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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
Cryptocurrency trading involves high risk, and is not suitable for all investors. Before deciding to trade cryptocurrencies, tokens or any other digital asset you should carefully consider your investment objectives, level of experience, and risk appetite. TaxGuru does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions. By the use of the above information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof.
