Over the past three months, the price of bitcoin has been gradually declining. The asset moved to a downward movement after it hit an all-time high above $69,000 in early November 2021. Since then, it has fallen in price by 38%. On January 10, the price of cryptocurrency for the first time since September fell below $40 million. On January 17, the asset is traded at $42.2 thousand, writes RBC Crypto.
Experts explained what is putting pressure on the bitcoin rate and when the cryptocurrency will be able to return to growth.
The financial world has recently been living in anticipation of a tightening of the Fed’s monetary policy, which will lead to a massive flow of investor funds from emerging markets into the dollar, Artem Deev, head of the analytical department at AMarkets, explained. According to him, against this background, stock markets are correcting with temporary rebounds and, as always happens in such a situation, investors are exiting risky assets, which include bitcoin.
“It is quite natural that the rate of bitcoin is declining, as well as other cryptocurrencies,” the analyst noted.
In addition to tightening monetary policy in the United States, pressure on the bitcoin exchange rate is being exerted by the emergence of new strains of coronavirus, which threaten an outbreak and disruption of supply chains, says Mikhail Karkhalev, financial analyst at Currency.com crypto exchange.
Prospects for Bitcoin
Most forecasts agree that the growth of bitcoin this year will definitely happen, Deev recalled. In his opinion, the cryptocurrency is able to recover to $60,000-68,000 and even reach $100,000. However, no one can say exactly when this will happen, since several important factors should be realized on the market, explained the head of the analytical department of AMarkets.
“The first condition is to reduce bitcoin to a level that will force investors to sharply increase investment in the asset. This may be a price of $20-30 thousand, so that investors decide to take advantage of such a minimum for purchases, ”says the analyst.
The second condition, according to Deev, is the stabilization of financial markets, the beginning of the recovery of the world economy, against which the demand for risky assets will increase. At the moment, it is difficult to predict the exact timing of the implementation of these factors, since the negative processes in the global economy are only growing, the expert added.
First phase of recovery
On-chain metrics data indicate that Bitcoin is already ready for a recovery, according to a financial analyst at the Currency.com crypto exchange. In his opinion, the potential risks with the tightening of monetary policy are already included in the price.
“If nothing sudden and supernatural happens, BTC will gradually begin to recover,” Karkhalev explained.
The main trigger for bitcoin’s recovery is a record rise in US inflation, the analyst added. It was on the publication of data on inflation that the cryptocurrency managed to rebound from the level of $40,000, Karkhalev recalled.
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