Bitcoin has managed to bounce back after a sharp slide over the last week. The legacy coin crossed the $36,000 mark, gaining close to 9 percent on January 25. Altcoins also followed with Ethereum rising nearly 10 percent to over $2,400.
But even though it looks like bitcoin is making a recovery, analysis from Coindesk shows multiple oversold signals. According to the news site, this could lead to initial resistance at the $40,000 point, and result in unstable falls over the short term.
According to Marcus Sotiriou, an analyst at the UK-based digital asset broker GlobalBlock, it is hard to determine if this is a bear market. In an email to coindesk, he wrote, “I think the determination of a bull/bear market is not as clear as previous cycles, due to the structure of the market changing drastically with institutions entering the space.”
One problem the broader crypto market has been facing is that it has been moving in tandem with stocks, which have continued to fall since the start of this year. Fear of tighter monetary policies from the Federal Reserve has led to investors selling risk assets like technology stocks.
“It’s possible that macroeconomic concerns, such as the Fed’s response to inflation rates, have facilitated more de-risking activity in general,” said Juthica Chou, head of OTC options trading at Kraken, in an interview with CNBC. “The recent price drop, coupled with high volatility, could be leading to further selling as participants look to reduce risk.”
Some experts predict the worst is not yet over for bitcoin and other cryptocurrencies this year. Carol Alexander, professor of finance at Sussex University, said in an interview with CNBC that she expects bitcoin to “tank to as low as $10,000 in 2022.”
“If I were an investor now, I would think about coming out of Bitcoin soon because its price will probably crash next year,” she said. While this may seem like a fringe prediction, in 2018, Bitcoin fell from a high of $20,000 to $3,000 in a few months.
In many ways, 2021 was a “breakthrough,” says Dave Abner, head of global development at Gemini, a popular cryptocurrency exchange. “There’s tremendous focus and attention being paid to .”
Regarding the bear market we are facing right now, Ashish Singhal, Founder and CEO, CoinSwitch Kuber, India’s largest crypto platform, has some words of inspiration for people skittish on digital currencies. He expressed his sentiments regarding the latest market downfall in a series of tweets.
🧵👇Every financial market has up and down cycles aka bull and bear phases. Since the new year, #crypto markets have been testing the endurance of investors. (1/10)
— Ashish Singhal (CoinSwitch Kuber) (@ashish343) January 24, 2022
“Every financial market has up and down cycles, aka bull and bear phases. Since the new year, #crypto markets have been testing the endurance of investors”. He also went on to state that, “In 2021, crypto held firm during the peak pandemic and brought in an era of NFT and #Metaverse tokens. #NFT sales volume nearly touched the $25 billion mark. Many start-ups and large companies including the likes of Nike and Facebook are betting big on these themes.”