Despite the dangerous signals, some crypto experts were optimistic when bitcoin’s price dropped to $28,000. But on 13 June bitcoin price fell to $22,000. On 18 June bitcoin cost $17,592.78. It has fallen below $20,000 for the first time since December 2020.
What did happen with bitcoin and the crypto market?
Does it mean that crypto just is ‘Tulip Bulb’?
The short answer is no, it doesn’t.
The tulip bulb market bubble is one of the famous market bubbles. It happened in the 17 century when speculation boosted the value of tulip bulbs to extremes in the Netherlands. The best tulips cost upwards of $750,000 in today's money and many people embarked on the tulip trade.
People bought tulips more than they could afford. It's no accident that confidence was dashed and the prices of tulips fell in late 1637. The reason for the price downs was the fact that traders purchased tulips on credit and planned to repay their loans when they sold tulips. This scheme worked OK until tulip prices declined. Then the tulip bulb burst.
Comparing the crypto market to the Dutch tulip bulb bubble is nothing more than manipulation. Bitcoin and other cryptocurrencies have technological, social, and economic values in contrast to tulips. By the way, ‘Tulip Bulb’ was not a devastating occurrence for the Dutch economy.
Сrypto crash is largely macroeconomic
If crypto is not a bubble, which factors cause bitcoin’s price downs? These factors are macroeconomic.
If we take a look, we can notice that many markets fell. The Nasdaq composite fell 4.68%, Dow Jones Industrial Average fell 900 points, and some tech stocks were down 75% from their highs last year.
The global economy's health is the largest factor affecting the prices of many assets.
This is why the hiking rates of central banks, rising inflation, and growing unemployment drive the prices of the assets down. Bitcoin and other cryptocurrencies can't be an exception because it is connected to global macroeconomic events.
During times of economic prosperity, people are more willing to make riskier investments. Such investments mean a higher return as a reward. It means people attempt to minimize risk by investing in assets with more predictable returns but lower rewards. Due to its volatility, bitcoin looked risky investment that attracted many investors. The demand for crypto increased prices, but the global recession has started. The demand for high-risk assets like bitcoin sharply declines that driving prices down.
So, we can see that macroeconomic factors forced crypto prices to fall. Well, this is good news for many crypto investors, even if they bought bitcoin for $48,000.
Should you invest in bitcoin and other cryptocurrencies?
If we look at trading indicators like the Relative Strength Index (RSI) and Simple Moving Average (SMA), we can assume bitcoin is attractive to buy it. But the problem of predicting the bottom of the bitcoin price stops investors to buy crypto right now. Some crypto experts predict that bitcoin will drop below $10,000 in the coming days.
In fact, you do not need to know when bitcoin hits bottom, because bitcoin has become a long-term investment due to the global recession. When the global economy starts recovering, crypto prices will go up again. Crypto winter is coming but spring is on the horizon. Industry experts project that bitcoin's price to hit $100000, but no one knows when the cryptocurrency will break that threshold. This is why you would win even if you bought bitcoin for $48,000.
But crypto is still a risky investment. If you want to invest in bitcoins or other cryptocurrencies the part of crypto on your portfolio should be between 1 and 5%.
Also, you have to buy bitcoins on reliable crypto exchanges like EvBlock. This crypto exchange is powered by a Swiss fintech company Evanera and designed for non-tech persons and crypto beginners to simplify the buying and selling of cryptocurrencies. To avoid pitfalls in the crypto market visit EvBlock https://evblock.com/