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Last week bitcoin fell sharply, now many investors are waiting for a deeper fall. Certain factors will help to understand whether a long-term correction has begun and in which case cryptocurrencies can return to growth.
The cryptocurrency market found itself in an unstable position after the bitcoin price collapsed by 20% on Saturday night, to a local minimum of $ 42 thousand. Now the first cryptocurrency is trading at $ 51 thousand, but the risks of the start of a long-term correction have increased. The experts explained whether it is possible to say that a “bearish” market is beginning, and by what signs it is determined.
A distinctive feature of the rollback from the beginning of a long-term correction is that the real problems that could lead to a fall in the value of assets have not yet occurred, says Maria Stankevich, Development Director of the EXMO crypto exchange. According to her, the market will face negative developments in the future, and forecasts are based on various indirect factors. That is, the beginning of the correction is preceded by a deterioration in sentiment, the optimism of investors is replaced by anxiety due to possible problems. As a result, purchases become more restrained, and sales gradually increase.
“When the price reaches low values, it becomes uncomfortable for new buyers to enter the market, as they can clearly see the downside potential on the chart, but the upside potential is not so obvious at all,” explained Stankevich. At the same time, regarding the current situation on the crypto market, she noted that she does not consider the growth potential of bitcoin exhausted, as she does not see any serious factors for a market reversal.
Now the main negative factor is the possible decision of the US Federal Reserve to accelerate the reduction of the program of economic incentives and the buyback of assets, which can be made as early as December 14-15, added Roman Nekrasov, co-founder of the ENCRY Foundation. If such a decision is made, then the stock market will receive less cash injections, and this will affect the volume of investments in cryptocurrency, the expert is sure. According to him, this negative factor could be compensated by positive events, but there are none yet.
“Distinguishing a rollback from the beginning of the crypto winter is quite problematic, usually it can be done in retrospect, and not predicted at the very beginning. Now, market participants should be extremely careful when investing in risky assets. And it’s not only about cryptocurrencies, but also about the shares of the same technology companies. You should carefully monitor the level of support and where the price of bitcoin is consolidating after another fall, “Nekrasov warned.
He indicated the level of support for bitcoin at around $ 45 thousand. A fall below this zone in the current environment is unlikely, the specialist said. He predicted that the rate could fall below in the event of a negative decision for the market by the Fed. Nekrasov called a wait-and-see position, buying during a fall and a good diversification of the investment portfolio as optimal at the moment.
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