Cryptocurrency prices have been rising in recent days, but some experts don’t expect that to last.
Bitcoin rose 5% and rose above nearly $22,000 over the weekend – a big jump from its fall to near $17,500 earlier this month. Ethereum also saw a big jump, surging above $1,200. For investors, a big question remains: is the crypto market really recovering or is this just another false alarm, also known as a bull trap?
Some experts say the signs point to a bullish trap and investors should beware, warning that the worst may be yet to come amid continued macro uncertainty – and that the price of bitcoin, along with other crypto -currencies, could fall further.
“While we’ve seen bitcoin and ethereum rally recently after creating lows around $17,500 and $880 respectively, we’re not confident yet to call a bottom up,” says Richard Usher, head of over-the-counter trading at BCB Group, a crypto financier. solidify. “The overall risk environment remains on edge, and while we believe risk assets will rally significantly towards the end of the year, we see risk biased towards another sell-first.”
Is the Crypto Market Recovering or Just a Bull Trap?
It is easy for investors to hope that the worst is over for the crypto market. Bitcoin price remained above $20,000 and Ethereum held above $1,100 on Tuesday, a significant jump from their 15-month lows just two weeks ago.
But with war raging in Ukraine, interest rates rising, inflation soaring and talk of a looming recession, the coast is far from clear, experts say. Many are calling what we are seeing with crypto prices this week a bull trap.
This is when a stock or cryptocurrency reverses after a convincing rally and falls below a previous support level. Basically, it’s a false signal, tricking investors into thinking the market has finished falling and it’s a good time to buy.
Experts say there will likely be another sell-off in the crypto market over the next few weeks or months. Crypto expert and educator Wendy O expects Ethereum to fall to $750 and bitcoin to fall to $10,000. Kiana Danial, entrepreneur and author of “Cryptocurrency Investing for Dummies,” predicts bitcoin will fall to $11,000, while venture capitalist Kavita Gupta calls for a minimum of $14,000 for bitcoin and $500 for ethereum .
Martin Hiesboeck, head of blockchain and crypto research at Uphold, says bitcoin holding over $20,000 has little to do with the crypto itself and more with the geopolitical situation. and overall macroeconomics, which he believes will not improve significantly in the near term. The crypto market, which has been following the stock markets lately, has fallen victim to the broader sell-off of risky assets in the market.
“War in Ukraine, supply chain glut and inflation are by far the biggest concerns,” Hiesboeck says. “So far, bitcoin hasn’t proven to be the inflation-proof haven that its biggest fans thought it was.”
Is it the right time to invest in crypto?
The crypto market is volatile and highly unpredictable, so buying cryptocurrency at any price is risky – let alone during a market downturn that might not go away anytime soon.
However, if you have assessed your tolerance and can accept the risk, experts say now may be the right time to enter the crypto market as prices are lower than they have been. been for years. There is no “perfect” time to enter the market, so keep in mind that price fluctuations are normal and be prepared for crypto prices to fall even further. Don’t invest in crypto if you can’t handle the sharp market fluctuations, which can sometimes be as high as 15% in a 24-hour period.
Additionally, you should only invest what you are willing to lose and after prioritizing other aspects of your finances, such as building up an emergency fund, paying off interest rate debt, interest and investing in a traditional retirement account like a 401(k).
Financial advisors recommend investing no more than 5% of your portfolio in crypto and sticking to the two most established cryptocurrencies: bitcoin and ethereum. According to NextAdvisor’s investment score, bitcoin and ethereum are considered better investments thanks to their longer track records and long-term value growth, among other key factors. Here’s how our score stands out for 10 cryptocurrencies that consistently rank among the top by market capitalization, excluding stablecoins, for reference:
|PIECE OF MONEY||NEXTADVISOR INVESTABILITY SCORE|
|Binance Coin (BNB)||49/100|