The new “cryptospring” is here. Ever since the beginning of the year the graph for bitcoin rate in relation to dollar resembles a mountain range: starting at $ 20,000 in mid-December, the first cryptocurrency quickly reached 40,000$, slightly slower got to $ 65,000 and went down (though also unevenly). Now BTC price is hovering around $ 40,000 mark and trading takes place in both the green zone and in the red – the lack of a pronounced trend is also alarming.
And all of this – in just six months. Such dynamics have obviously perplexed not only investors, but also financiers, who have to this point been pretty closely looking at cryptocurrencies as a promising means of payment. However, clearly not with such volatility…
Thus, by the middle of the year the question is – what’s next? And the answers are all over the place, often diametrically opposed to each other.
In early June, the business magazine Bloomberg published the findings of analysts at Oanda Corp, Evercore ISI and Tallbacken Capital Advisors, that suggest the price of BTC could soon drop to $ 20,000 per cryptocoin. According to Edward Moya, senior analyst at Oanda Corp., if the price of bitcoin, once again depreciating, crosses the dangerously low bar of $ 30,000, it could lead to a massive sell-off, which will further accelerate the decline. In turn, experts at
As ever, there are also a lot of analysts who continue to issue forecasts of “You will see, in a year BTC will cost $ 100,000 per coin, and a year after that – a million” variety. We saw plenty of them in 2017, and now there are still quite a few of them (though less overall). So which predictions, the pessimism of Bloomberg analysts aside, are the more realistic?
Most likely, the rate will continue its growth in the nearest future. It is no coincidence that in recent days the outflow of cryptocoins from stock exchanges has increased, which usually indicates the beginning of a “bull” trend (investors have calmed down and don’t expect anything disastrous from BTC). If we look at the behavior of traders, we see an increase in the size of leverage (traders are willing to take risks), a general increase in interest (increase in the total number of open positions on the market), neutral and positive funding rates (investors are expecting the price to rise).
Therefore, it can be assumed, that in the following few weeks bitcoin will reach the $ 42,000 mark. The next step after that is $ 46,000.
Going forward, though, much will depend on institutional investors. A lot of them, amid the recent depreciation of all cryptocurrencies at once, got scared and began to withdraw capital from BTC and altcoin-related products. Over the past month, the outflow has noticeably increased: in the second week of June, major players took out $ 141 million from bitcoin funds, and the monthly trading volume on the market decreased by 62%.
But if you look at the dynamics of the market in the first quarter, everything doesn’t look bad at all. Institutional investing in BTC grew 170% in the first quarter, with investments from both hedge funds and asset management companies.
In total, over the first quarter of 2021, $ 122 billion was invested in cryptocurrencies only by institutional investors (compared with $ 45 billion at the beginning of the year). And this is a good setup for the entire year, that is attracting more and more capital.
So the trend for investing in BTC tools is likely to continue. Bitcoin is, of course, very volatile, but it’s the US dollar that is setting inflation records, and Joe Biden’s proposal to radically increase taxes in the United States will surely provoke another flight of investors to assets such as gold and cryptocurrencies.
Investment bank Goldman Sachs decided to give institutional investors access to two more cryptocurrency market products, which serves as a piece of indirect evidence. Matthew McDermott, head of the bank’s crypto division, told the reporters that it would be Etherium futures and options.
Moreover, new products will appear on the market in the coming months. McDermott stressed that many large players decided to enter cryptocurrency exchange precisely after the rates falling in May, taking advantage of comfortable prices. At the same time, there is a growing interest not only in bitcoin, but also in its alternatives.
As for many small private investors, they, of course, are frightened by the leaps in the price and don’t know how to behave. Still, by the looks of it, greed will, as usual, prevail.
Suffice it to recall that at the end of 2020, American holders of bitcoin alone made an impressive profit of $ 4.1 billion. According to Chainalysis, the US was in first place among the top 25 countries, where citizens were able to make very good money off the new “cryptospring”, which included the growth of BTC against the backdrop of generous amounts of money being helicoptered into the American economy.
In second place, yet way behind the United States, was China: its traders received a total of $ 1.1 billion in profits. This is followed by Japan, Great Britain and Germany. Also among the leaders are Russia, Czech Republic, Vietnam and Turkey.