Since April, when the bitcoin rate peaked at $ 64.8 thousand, the coin has fallen in price by 39%. Experts explained how to recognize the beginning of a long decline in cryptocurrency quotes and what investors should do in this case?.
Over the past week, the bitcoin rate has grown by 4%, the main cryptocurrency is trading at $ 39.4 thousand, and its capitalization, according to CoinGecko, is $ 738 billion.
But the current bitcoin rate is almost 40% lower than the April level, when the historical maximum was reached – $ 64.8 thousand .
On May 19, bitcoin quotes fell to their lowest level since January of this year – $ 30 thousand. After this decline, the cryptocurrency market became “bearish”, says financial analyst of the crypto exchange Currency.com Mikhail Karkhalev. According to him, the 20% drop, which is considered the beginning of the “bear market“, has already passed.
“Like any other asset, product, product or service, the balance of supply and demand affects the value of cryptocurrencies. If the demand for an asset is high, the price rises steadily. If demand is weak or absent, the price falls until demand reappears, ”the analyst explained.
When there are more sellers than buyers in the market, this generally negatively affects the market, as players begin to sell off assets, the fall is intensified by the fact that players using borrowed funds have margin calls (automatic closing of positions due to a lack of borrowed funds). funds to cover losses), explained Vladimir Smetanin, CEO of the financial company Newcent.
“Sometimes bearish selling occurs in a bull market, so it is important to look at the long-term trend. In the case of cryptocurrency, we see a long-term growth trend, ”the expert noted.
In his opinion, now the “bears” have temporarily seized the initiative, but by the end of the year, bitcoin will grow to $ 100-150 thousand per coin.
What an investor should do in a bear market
Now a lot of new players have come to the cryptocurrency market, including novice investors who find it difficult to stay cool in a falling market and who can incur significant losses by starting to sell an asset, Vladimir Smetanin explained.
He also added that he still sees great potential in the cryptocurrency market and considers the current situation a good entry point, but in the end the decision should depend on the investment horizons.
Mikhail Karkhalev believes that the ideal option for investors is to wait for the end of the “bear market” and then enter the asset at a sagging price.
Before making a deal, the analyst recommends conducting an in-depth analysis of the market and making sure that a favorable price for the purchase is selected.
