The last couple of weeks has been extremely painful for crypto investors. Bitcoin dropped from an all-time high of $69,000 in Nov 2021 to a current low of $27,000. The crash of the Terra ecosystem only made matters worse – its native cryptocurrency, LUNA, dropped from $85 at the start of this month to an unimaginable low of $0.0001644 at the time of writing. And it’s not just Bitcoin and Terra; the downturn has left the entire crypto market reeling.
Several investors are cutting their losses and moving out of the crypto space. Others are questioning their decision to enter the space in the first place. With all this gloom and doom, you begin to wonder: Is this it, or is there still hope for the cryptocurrency industry? Or maybe it’s a good time to enter the market and make huge profits?
Writing for CoinDesk, Christopher Robbins, a nationally recognised journalist, argued that crypto volatility is a feature and not a bug. Despite its high volatility, the industry has survived for over a decade, seen investors from all walks of life taking an interest, and survived several such steep drops.
In a podcast for the same publication, Tyrone Ross, an investment adviser, said that Bitcoin was created to be an alternative currency, and it is just that. It has provided stability during economic chaos. It has withstood everything from pandemics to battered supply chains to increased market volatility.
In 2021, before all of this began, it was easy to claim that Bitcoin would hit $100,000. But now, with the crypto industry currently wrestling with rising inflation, tighter monetary policies and the rampaging war in Ukraine, that price prediction looks extremely far of. However, experts still believe that the coin can touch $100,000, albeit on a slower timeline.
What happens next?
Experts and influencers are split on where the crypto industry is heading. While Michael van de Poppe hopes Bitcoin could continue towards USD 32,800 or 34,000, other influencers believe the prices haven’t reached the bottom yet and that the worse is still ahead.
Bitcoin’s on-chain data monitoring resource, Whalemap, has identified four “do or die” support levels for Bitcoin. It analyses buying and selling of Bitcoin whales, and currently, whales have deployed funds at these levels – USD 26,439, USD 25,666, USD 24,718, and USD 24,673. “This or we (are) going much deeper,” it said in a tweet. Support is a price level where a downtrend pauses due to increased buyer interest.
Previously, in a tweet, it had said that two times more losses than profits were recorded on-chain in the last couple of days. When this happened the last time, Bitcoin had seen a rally. “Let’s see what happens this time,” it said.
Last week, Bitcoin also tested its realised price of around $27,000. The last time this happened was in 2020, when the markets crashed following the global lockdown in March. Realised price is the value of all bitcoins at the price they were bought, divided by the total number of coins in circulation. Historically, the realised price has provided signals of a market bottom.
At the same time, realised losses also spiked to their second-highest daily levels ever. Again, the last time this happened, the Bitcoin price had rallied, Whalemap said. However, it is not clear if a total return to the realised price will conclude the bearish mood, on-chain analytics firm Glassnode noted in its newsletter.
Regardless, investors could not resist buying the dips in the past couple of days. Even with the world’s largest digital currency hitting $26,697—the lowest level since 2020—data suggests it is a good entry point to invest in Bitcoin. However, analysts have warned against taking this as an indication that the market will recover.
Meanwhile, Andreessen Horowitz, a venture capital company, released a State of Crypto report that said this is the fourth crypto winter. The previous ones came in 2011, 2013, and 2017. But if you zoom out, all you see is progress. “These cycles appear chaotic from the outside but have an underlying order,” it said.
During these four cycles, the report showed that the global crypto market cap has risen over 270 percent, developer activity has gone up by ~70 percent, start-up activity is up by 60 percent, and social media activity has risen by over 80 percent. “The result is consistent long-term growth, driven by a feedback loop between interest and innovation,” it added.
Therefore, entering the market during the crash might be a great decision. Prices are low, and the scope of huge profits could be extremely high. And, if you do decide to enter the market and buy the dip, WazirX is a great platform to start your crypto journey. You have more than 250 cryptos to choose from, and you can start investing with as little as Rs. 100. Moreover, the user experience is seamless, and you also enjoy 24*7 customer support.
Note: This is a partnered post.
Disclaimer: Cryptocurrencies are unregulated virtual assets, not a legal tender and are subject to market risks.