Considering 15% daily swings are the norm in the crypto market, prices haven’t moved much in the last few days, with bitcoin holding steady near the $19,000 to $20,000 range and ethereum floating around $1,100. The two largest cryptocurrencies seem to be hovering around their current price levels with no clear direction in sight.
“At this point, $19,000 to $20,000 is quite simply prior highs from the last major bull market in 2017,” says Stéphane Ouellette, CFA and founder of FRNT Financial, an institutional capital markets and advisory platform focused on digital assets. In other words, it’s difficult to predict what happens next and when. “The bitcoin and ethereum futures curves are completely flat, implying that the market is also entirely uncertain of future direction,” he says.
Still, the crypto market remains under intense pressure, with the possibility looming of another downturn. How low bitcoin goes in the coming weeks or months will depend on “whether the stock market made a bottom and if no major crypto company falls into liquidation,” according to Edward Moya, a senior market analyst at OANDA, a brokerage firm.
“A plethora of bearish crypto headlines continues to drag down bitcoin below key technical levels. Sentiment will take some time to improve, especially after many anticipated crypto deals are falling apart,” says Moya, referring to crypto exchange eToro abandoning a deal to go public via SPAC merger, while many troubled companies like BlockFi and Voyager are scrambling for deals to stay afloat.
What’s Happening With Crypto Prices and What Does It Mean for Investors?
Bitcoin on Wednesday was up nearly 2.5% in the last 24 hours, trading near $20,000. Ethereum’s price held steady near $1,100, up 3% in the last 24 hours. Though the two largest cryptos have experienced a small rebound in the last day, experts say we’re not out of the danger zone yet.
Bitcoin and ethereum have lost more than two-thirds of their value since last November, and experts predict crypto prices could drop even further now that bitcoin’s price has dipped below $20,000 several times in recent weeks. On top of that, investors are still feeling uncertainty about the current economic conditions like surging inflation, a potential recession in the U.S., rising interest rates, and a shaky stock market.
“Bitcoin is stuck in its current trading range because of the ‘nervousness’ of market participants,” says Joshua Fernando, CEO of eCarbon. “They have seen wild fluctuations in the past few months that have devastated the market, so it is reasonable that they are now trading cautiously.”
“There is no doubt that the market is waiting for macroeconomic news and less tension in geopolitical matters — with the war in Ukraine, the specter of inflation, and possible recession being by far the biggest worries,” he says.
So, what should crypto investors do in light of this? Nothing, experts say. If you’ve invested in crypto for the long-term using a buy-and-hold strategy, price swings are to be expected and big dips are nothing to be overly worried about.
Experts recommend keeping your cryptocurrency investments to under 5% of your portfolio, as long as your crypto investments don’t stand in the way of your other financial goals. Always prioritize saving for an emergency, paying off high-interest debt, and contributing to a traditional retirement plan before ever investing in crypto. If you’re a good spot financially and ready to enter the market, experts say now may be a good time to buy bitcoin or ethereum while prices are low, keeping in mind that prices could fall down more.
“Perhaps like equities, investors just got a little carried away in the ‘buy everything’ frenzy of 2021 and are sitting on the sidelines waiting for signs that equilibrium has been reestablished, and the bull market is back on,” says Fernando.