The past four months have been a painful wait for crypto enthusiasts around the world, as they sit in a largely bearish market. But, after a long wait, good news came last week when Bitcoin (BTC) rose to $40,000. While this does not necessarily indicate the end of the bear market, the gradual recovery of the crypto market, coupled with several bullish signals, has given many investors and enthusiasts reason to be optimistic.
Crypto Market Makes Massive Recovery With BTC and ETH
Price at the time of writing 1 BTC With a 24-hour trading volume of around $35 billion, hovers around $50,000. Although bitcoin price has seen some volatility recently as it bounces off support and resistance, they are still up more than 50% since falling below $30,000 in late July.
BTC 3 Month Price History – Source: CoinMarketCap
While on the one hand, China has taken several steps to curb crypto trading and mining, on the other hand, Securities and Exchange Commission (SEC) chairman Gary Gensler has called the crypto space the “Wild West”. ”, and has said that it will not settle on the establishment of a regulatory framework. Despite all this, the prices seem to be increasing.
However, bitcoin’s extraordinary gains appear to be quite small, unlike Ethereum (ether), which has nearly doubled in price during the same period. Ethereum is currently trading above the $3,200 mark, a gain of nearly 300% since the beginning of 2021, compared to a 40% increase for Bitcoin. This has significantly increased the market valuation of Ethereum, rising from a fifth of Bitcoin to more than half of its current value.
ETH 1 Month Price History – Source: CoinMarketCap
Along with Bitcoin and Ethereum, several other major cryptocurrencies have also continued to rise, with Uniswap, Polkadot, and Dogecoin gaining over 10% in the past seven days. Cardano (ADA) has seen the most increase in price of any major coin, with an increase of over 20%.
Is the crypto market over its bearish period?
The recent price increase for bitcoin has sent analysts and investors on different trajectories regarding the future direction of the crypto market. While some predict that the bitcoin price will ‘go to the moon’, others are concerned about a ‘crypto winter’.
PlanB, a pseudonymous analyst, is one of the most vocal proponents of the first theory that bitcoin will continue to rise in value.
The Dutch expert rose to fame in 2019 after releasing his stock-to-flow model, which is based on bitcoin’s inherent scarcity and has proven to be unsurprisingly correct up to this point. The stock-to-flow ratio has proven to be a highly reliable metric for predicting the price of bitcoin over time, and it appears that $100,000 is a possible price target later this year and in 2022.
With bitcoin volume set at 21 million and mining rewards halving every four years, according to stock-to-flow predictions, bitcoin will face an increasingly large boom and bust cycle. The current peak is in the $100k to $500k range, as measured by multiple iterations of the model.
Source: Twitter
Typically, every four years, bitcoin issuances are halved, meaning that the rate at which new BTC is mined is halved. This reduces the supply of bitcoin and creates a shortage. The previous halving took place in 2020, and the next halving was scheduled for 2024. Investors are confident because historically each halving has been followed by a strong bull run.
Institutions and their growing interest in bitcoin
Despite being highly volatile, bitcoin has historically given returns that outweigh this risk. And buying dips has proven to be a guaranteed strategy for maximizing one’s returns in the long run. This is the reason why institutions are showing their interest in investing in bitcoin. The recent buying pressure and price gains can be largely explained by the willingness of institutional investors to invest in cryptocurrencies.
More than a dozen companies have applied to securities regulators to launch crypto-related ETFs (exchange-traded funds), including Goldman Sachs. Other firms that have applied to the Securities Exchange Commission (SEC) for ether-based ETFs include VanEck and WisdomTree, ETF specialist firms. A week ago, JPMorgan Chase also announced that it would be giving all of its money-management customers access to bitcoin and other cryptocurrency funds.
As the number of institutions investing in bitcoin grows, so will the value of the asset class, making it a more attractive investment for institutional and retail investors in the United States and Europe, and many other countries.
Increased institutional interest, along with a growing number of whale accounts that own large amounts of cryptocurrency and with a single trade could affect the price of the cryptocurrency – suggesting a bullish market for bitcoin in the long term. give.
Is now a good time to invest in crypto?
BTC’s latest climb to its monthly high marks not only the cryptocurrency’s 10-week high, but also a breakout above its nearly 3-month-long $30k-$42k consolidation range. Both these facts strongly suggest that BTC is on the verge of a new uptrend. The next few days, weeks and months will determine whether this remarkable turnaround is the second leg of a record-breaking bull run or a dead cat bounce.
As far as Ethereum is concerned, it has performed well. Due to the upcoming launch of DeFi (Decentralized Finance), NFT (Non-Fungible Token), ETH 2.0, and its ongoing migration to the Proof-of-Stake architecture, ETH has attracted interest from both new and existing. Market participants from the beginning of the year. Furthermore, the London hard fork update, which will significantly reduce transaction fees on Ethereum (and burn ETH as transaction fees, reducing supply and causing deflation) has also been a major driver in its recent rally. Given the strong demand for the cryptocurrency, experts predict that ETH will outperform BTC this year.
Despite the recent rise in the value of many cryptocurrencies, investors should be aware that there is no quick way to make massive profits. All speculative investments involve patience and the ability to correctly interpret market movements. Investing in any asset, while its price is low and predicted to rise in the future, has long been considered a wise investment strategy. However, because it is difficult to predict when the price of cryptocurrencies like bitcoin will rise or fall, there is no such thing as a good time to invest.
Simply put, risk management and profit maximization are the two main principles of investing. Although the crypto market is notoriously volatile, with prices fluctuating up to 30% in a single day, risk management is possible and within everyone’s reach. Rather than trying to make easy money, the biggest strategy for investing in cryptocurrency is to grow your wealth over time, as crypto assets follow cycles and cycles over time. If your goal is to make long-term profits, then buying during the downtrend and holding until you make a profit is an option to consider.
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