Tuesday, June 25, 2024

When Bitcoin price returns to all time highs?

Currency.com financial analyst Mikhail Karkhalev in his author’s column why the cost of the first cryptocurrency fell to $ 30 thousand, is a new collapse of 50-70% possible and what price the asset will reach by the end of the year.

On May 26, Bitcoin again failed to overcome the important resistance level of $ 40 thousand, after which its price on the Currency.com crypto exchange fell to $ 37 thousand. The cryptocurrency continues to recover after, on May 19, its quotes fell by a third per day, to $ 30 thousand. ., then rose above $ 42 thousand and on May 23 fell again to $ 31 thousand.

The fall in the bitcoin rate last week took place against the backdrop of a statement by the Chinese authorities. Vice Premier of the State Council of the People’s Republic of China Liu He called for stricter regulation of mining and crypto trading in the country. The market collapsed despite the fact that the government did not even propose specific measures to influence the cryptocurrency industry.

The government then reiterated its tough stance on cryptocurrencies in an article titled “Urgently Eliminate the Hype and Chaos around Virtual Currency,” published by the Xinhua News Agency. After that, miners began to leave China, and trading platforms began to suspend services to customers from this country.

The negative impact on the market is already included in the price, in fact, the entire current so-called “cryptohedon” is associated with this. Similar bans have already occurred in China more than once, but all of them had only a temporary negative impact. Accordingly, we are not talking about a long-term perspective.

However, the negative background was supported not only by news from the Middle Kingdom. Elon Musk added reasons for selling cryptocurrency after criticizing Bitcoin, and Tesla refused to sell its products for it.

In fairness, at the time of the collapse of quotations, Musk expressed support for the crypto community by posting a post “Tesla has diamond hands.” It was a hint that the company was not selling its bitcoins. And then the billionaire said he had a meeting with North American miners to discuss the use of renewable energy sources.

In general, even now, the situation in the global economy and the crypto market indicates continued growth. Without these prohibitions, it is likely that the market would continue to grow after a slight correction. In the near future, an increase of 50-70% from current levels is possible, given the outflow of bitcoin and ethers from exchanges, stablecoins “free” on the market, as well as the very low cost of top cryptocurrencies in the current growth cycle.

After the collapse of bitcoin to $ 30 thousand, there was the largest outflow of bitcoin from crypto exchanges since last year. In 24 hours, 175 thousand bitcoin worth about $ 7 billion were withdrawn from trading floors. It also became known that large investment funds were the main buyers of cryptocurrency during the fall.

According to the Glassnode service, the lion’s share of the bitcoin sold during the current drop were purchased in the last 3-6 months. This suggests that it was mainly newcomers to the market who were selling. Not big investors, but retailers who planned to make a lot during the current growth cycle. However, the situation in China and Musk’s careless statements scared them, causing panic sales. As a result, the price dropped very impulsively.

I still adhere to the scenario that bitcoin will reach $ 80-85 thousand by the end of the year. The current fall, it seems to me, will only accelerate the price, as it was after the March 2020 collapse.

Much will become known after the June meeting of the US Federal Reserve, at which they will either announce the start of curtailing the QE (quantitative easing) program, as well as other stimulus instruments, or not.

If announced, then all risky assets will temporarily drop in price. However, it seems to me that the Fed understands that now is not the time to cause a collapse in the markets, so the withdrawal of incentives will be postponed, as a result of which the cryptocurrency will rise and return to the highs.

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