With the first rate hike on March 16, Bitcoin fell back slightly and reached $47,967 by the end of the month. However, on April 6, when it became known that rates would be raised by half a point, the digital currency fell 4.3%. Last Wednesday, the Fed applied the second rate hike and since then Bitcoin lost just over 13%. Bitcoin deepens its correlation with the main US technology index, the Nasdaq, which heads its sixth week of negative streak.
“Faced with rising inflation fears, most investors have opted not to risk it by selling both stocks and cryptocurrencies to reduce risk”said Darshan Bathija, CEO of cryptocurrency exchange Vauld. Amid a feeling of “extreme fear” in investors, from Ambit We consulted the main analysts to know how to act in this complex scenario.
“Bitcoin accumulates five consecutive weeks down, something that happened only three times in the entire history of BTC. The price broke a strong support that was around USD 38,500 and we can see that in the short term it descends to u $30,000 (area where there are a lot of buy orders on the exchanges) Anyway, it is impossible to know how the market is going to behave, and also there is a concrete possibility that the price of bitcoin will be located above $ 40,000 again. I think that the difficult global economic situation is an important aspect to consider, since it is increasing the interest in this type of assets,” explained Axel Becker, Content Manager at Decrypto.la.
Regarding the price of Bitcoin, Iñaki Apezteguia, professor and crypto communicator consulted by this medium, stated: “it still has a way to go in the area of $29,000, which is its support, that can happen if the downward trend continues. There have been strong corrections in the past in the order of 80% and 90%: we have 93% in 2012, 86% in 2015 and 85% from 2018 to 2019. Right now we are in a correction order between 55% and 65%, based on previous patterns we may still have a little more to correct.”
Regarding the correlation with the main North American indices, Apezteguia assured that the correlation is already a fact: “Bitcoin during this year has lost 30% at today’s prices, the Nasdaq has lost almost 25% and the S&P on average is going in order of more than 25%, so all the measures that are affecting the stock markets also affect cryptocurrencies. What cryptocurrencies do have is that they recover faster than the indices and markets.”
What should be done?
For Axel Becker, “If the objective is short-term speculation, I do not recommend buying. Taking into account the maximum that had reached in April 2021, we can infer that we are in the bearish stage of the cycle. I see it very difficult for us to mark a new all-time high in the coming months. These times are usually ideal for buying cryptocurrencies and holding medium/long term.”
Finally, Apezteguia contributed his view: “For this type of situation of strong corrections, the important thing is to be consistent with the strategy that each one has in terms of investments and risk management. The healthy thing is always to have some reserve to be able to buy or invest at these low prices and averaging the position in the asset These corrections in the crypto market have happened previously. The market is still volatile but in the medium term no one who has invested in Bitcoin has lost money. But in these moments of uncertainty you have to be strong in psychological matters not to respond to the mood or the market sentiment of the moment”