Since the beginning of September, the value of the first cryptocurrency has almost doubled. Experts have warned that a correction may begin soon
On November 18, the price of bitcoin rose to $ 18.5 thousand for the first time since December 2017, and the capitalization of the cryptocurrency updated its all-time high above $ 340 billion. Since the beginning of September, the cryptocurrency has risen in price by 84%, since March – by 374%. A sharp rise in an asset often leads to the emergence of a profit loss syndrome (FOMO) among investors and traders. In such a situation, an asset is often bought impulsively in order to make money on growth without adhering to a specific trading strategy.
An investment in bitcoin in 2017 at a rate close to $ 20,000 could become unprofitable for at least almost three years. Despite the confident rise in the price of the cryptocurrency in 2020, it was never able to surpass the historical maximum. The situation on the altcoin market is much worse. Many of them still remain well below the peak levels. For example, XRP is up 95% and Ethereum is up 66%. Therefore, buying BTC now can be dangerous.
It is difficult to predict the future development of the situation, said Nikita Zuborev, senior analyst at Bestchange.ru. Volatility is high again. The expert “absolutely sure” recommended refusing to buy an asset in all long-term planning options.
“Buying bitcoin more than $ 15,000 is justified only for short-term strategies. It is important to stay sober and follow an investment strategy without falling for FOMO. The price is too high today, conservative investors should wait for a correction to at least $ 10- $ 11 thousand, this may happen as early as 2021 or earlier,” Zuborev predicted.
He does not exclude that bitcoin will rise in price to $ 25 thousand by the end of the year, but “definitely not more.” In addition, the analyst advised to wisely use stop loss orders, since the situation can change at any time.
“Historically, the end of the year has not been the best time to enter the market as retail investors have often caused trend reversals during the Christmas and New Year’s. It is very likely that the price will correct in the coming weeks, and we will see something similar to the situation in 2017, but with less dramatic consequences. Although before that, the historical maximum is likely to be updated,” the specialist concluded.
Sergey Zhdanov, CEO of the EXMO exchange, agreed with him, stressing that the likelihood of a correction every day is more real than continued growth. He recommended to wait for the correction. Most likely, the cryptocurrency will roll back to the psychological level, where there was a “fixation” of the price, for example, $ 15 thousand, Zhdanov said.
“When correcting, you need to pay attention to price behavior, which will show signs of a decrease in volatility before another rise. The number two recommendation is to buy altcoins, which look undervalued against the background of BTC, “the expert advised.
The head of the data analysis department of CEX.IO Broker, Yuri Mazur, also announced the imminent start of the correction. Traders, including market makers, will fix profits, so a rollback to $ 16-16.4 thousand is likely, where the previous significant consolidation of the bitcoin quotes took place, the expert believes.
In his opinion, it is possible that the correction will be less significant – to about $ 16.8 thousand. Mazur called the level of $ 16.4 thousand profitable to buy bitcoin in the medium term. The specialist is considering a pending order to sell cryptocurrency at the level of $ 21,000, where the next corrective movement is expected, which may turn out to be more significant both in real terms and in percentage terms.