Bitcoin has been flirting with $20,000 levels but it’s not a long-term indicator for the cryptocurrency market, which remains volatile.
When Bitcoin (BTC), the largest cryptocurrency by market cap and a broad indicator of where the crypto market is going, went below the $20,000 price level around mid-June, there was widespread disappointment among crypto investors. So, every time it now flirts with the $20,000 level—Bitcoin has been above that level in the past few days—expectations go up, but does it indicate anything?
“This time, the crypto markets were in the green when the US CPI (Consumer Price Index) data released on July 14 put inflation at 9.1 per cent, a 40-year high. People immediately foresee a Federal Reserve rate hike to tame inflation and there will be trading with an accent on selling," says Vikram Subburaj, CEO and co-founder of Giottus, a cryptocurrency exchange.
Will Bitcoin Fall Further?
Some crypto experts believe that in a bearish market, such relief rallies are common and are not a long-term indicator of where the markets are headed.
"The reality is we are in a bear market and these small pumps are not concrete. However, the market will present the illusion of growth and lure people to trade. It's standard for the need to show swings signs to attract capital while sitting on the sidelines. But consolidation has not been completed, and the market will correct it further. If Bitcoin breaks the support of 17K, I see it going down to 14K or more, and the same or more ratio can be seen in other coins," says Kumar Gaurav, founder and CEO of Cashaa, a crypto bank.
Sharat Chandra, vice-president of research and analysis of EarthID, a blockchain platform, predicts that Bitcoin’s fall in the coming days cannot be ruled out, but he adds that it is expected to reach all-time highs in the next 18-24 months.
“Despite the strong fundamentals, the crypto industry is still contending with many challenges, with liquidity and high price fluctuations remaining at the top of the list. Nonetheless, the recent recovery is definitely a positive development that can help the industry stand on its feet again," says Tushar Gandotra, founder and CEO, FiEx, a Web3 ecosystem that provides a platform for crypto-to-crypto and fiat-to-crypto transactions.
The current phase of correction is also being seen as a phase of purging. Utkarsh Sinha, managing director of Bexley Advisors, a boutique investment bank firm, says, “The recent bubble was driven by excessive froth and empty promises. Naturally, when the foam clears, there will be some beer left at the bottom of the glass. The question is which of the many crypto adventures represent the value proposition that can continue to attract investments in the bust cycle. Much like the dot-com bust, projects that emerge from this cycle could be the ones that create fundamental value using blockchain," he said.