Why Bitcoin Can't seem to Catch a Break
Despite concerns about economic growth, worries over inflation and threats to the stability of cryptocurrencies, the digital currency was still unable to surpass its height in 2017.
In June, Bitcoin fell by almost 38% to record its second-biggest monthly loss since its debut in 2009. It was trading at over $31,000 on June 1 and dropped to as low as $17,700 mid-month before recovering and ending the month at $19,209 according to CoinGecko data.
The monthly decline was second only to bitcoin's plunge of 38.6% in August 2011, and it brought prices below 2017's highs.
June's losses occurred as a result of the fall in macroeconomic sentiment, fears of inflation and risks from within the crypto ecosystem, such as the possible insolvency of crypto lender Celsius Network and the collapse of crypto hedge fund Three Arrows Capital.
Kassab, the chairman of crypto investment firm Centurion & Co., said that many factors had caused the losses. These included rising inflation fueled by COVID-19 and the Russo-Ukrainian war.
Kassab said that the "bad trend" in the crypto industry, which included Terra's collapse and Three Arrows Capital's liquidation, had a negative impact on bitcoin's price. He also expects that "institutional investments will pour into" bitcoin, which will result in a better price performance for the asset in July.
The prices will vary between $ 10,000 and $12,000,
Chris Terry of lending platform SmartFi says he expects bitcoin to trade in a narrow range in the short term. "If bitcoin stays in the $18,000 to $20,000 [range], it's going to be a long drawn out and we could be in this trading range for weeks," he said.
"Everyone seems to think that bitcoin needs to be flushed out and that the short positions need to be cleared, which would probably be an 80% retracement, which is normal in the markets, and that would put it down in the $12,000-13,000 range," Terry remarked.
At the time of writing, the largest cryptocurrency was trading at around $19,200, up 0.3% over the past 24 hours.
At the ECB's annual conference, central bankers renewed fears of interest rate hikes among investors. Federal Reserve Chairman Jerome Powell reiterated his commitment to increasing rates in order to curb inflation.
At the ECB meeting, Powell said he was more worried about the risk of inflation than about the possibility that higher interest rates could trigger an economic downturn in the U.S.
Powell said the Fed had to raise rates rapidly, Reuters reported. He feared that a gradual increase would cause consumers to believe that high prices of commodities would remain.
The end of the downturn
Many believe that bitcoin will eventually recover and reach new highs, despite the fact that some think it will not hit bottom yet.
"The bear market is not over yet and bitcoin has not hit the bottom," stated Jimmy Zhao, founder of crypto exchange ZBX. "I believe that the bull market will return and its price will surge to at least $100,000. So I recommend buying BTC while it's cheap and holding on to it."
Other industry players are known to buy bitcoin when it is cheap, and hold on to it until the next cycle.
"The market is in a state of extreme fear," said Anton Gulin, business director at crypto exchange AAX. "Some long-term holders have capitulated, and some businesses have defaulted." However, he added that it's neither the first nor the last bear market. Those with better long-term operational planning see it as an opportunity to build and prepare for the next bull run.
Gulin said, "Liquidity will shift and there will be a series of mergers and acquisitions in the coming months."