According to analysts, a "winter of cryptocurrencies" will pass the market in the next 8 to 9 months - There is a need to "scrap" and create applications and infrastructure that will attract new investors.
Bitcoin appears to be facing a new challenge due to the tense geopolitical tensions on the Ukrainian border and the possibility of the Fed raising interest rates by 50 basis points next March.
Ukrainians protestors
Cryptocurrencies with the largest capitalization have been considered safe investments for many years (safe-haven) that offset portfolio risk and reduce exposure to negative shocks.
Although Bitcoin's price has fluctuated for several months now, the cryptocurrency is trying to recover from its recent collapse earlier this year.
"Many have described Bitcoin as a currency without a homeland, though it has demonstrated stability during geopolitical tensions in the past. It is reasonable to expect an increase in interest during the current tensions in Ukraine", said Yuya Hasegawa, a cryptocurrency market analyst at Japanese bitcoin trading company Bitbank.
"However," he added, "the change in the cryptocurrency environment has made bitcoin weaker, exposing it to the volatility of US markets, so the investment climate for the cryptocurrency market might improve as the political tensions in east Europe ease".
Bitcoin's value has fallen by 10% this year, according to Coin Metrics, and by 38% since November's high.
Due to rising interest rates, the rise in technology stocks may be limited for some time. This means that the "winter of cryptocurrencies," as experts describe it, may last several months.
"If we are in a bear market, we may spend 8 to 9 months on a flat or downward trajectory, which is a great opportunity to remove" tourists" from the market and engage "real investors" who continue to invest in the evolution of cryptocurrencies", said Chris King, CEO, and founder of Eaglebrook Advisors.
For Fairlead Strategies founder Katie Stockton, the value of bitcoin will remain around $ 46,730 this week.
Ready for a new rally
As the bitcoin investment cycle expands over time and yields decline, other assets will become more important for introducing new users to the cryptocurrency environment. According to King, Bitcoin has not yet found the app that will make it shine, but new entrants will help boost market growth and innovation.
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