As the primary cryptocurrency hovers around $21,000, retracing back from the weeks-high level at $24,100, experts across the industry remain cautious in regards to its upcoming price action. However, emerging signs have indicated that the asset’s price has found a cyclical bottom, reported Bloomberg.
A Cautious Attitude In Reign Among Experts
The relief rally in the past weeks is seen by many as a dead-cat bounce during the bear market, as the battered cryptocurrency seems to have lost steam amidst the market bracing for the Fed’s announcement later this week. In tandem with US tech stocks, Bitcoin’s performance will largely depend on the Fed’s upcoming decision – a 100 basis point interest hike likely causing a deepened selloff in the crypto market.
In the aftermath of the historic mayhem eliminating over 70% of the crypto market capitalization within months, experts believed the market needed some time to regain investors’ confidence. Shawn Cruz, head trading strategist at TD Ameritrade, said Bitcoin’s solid recovery rests upon the shift in “risk appetite” when investors re-adopt the risk-on attitude. Otherwise, the asset is likely to remain stagnant at the current level.
Crypto analytics platform Glassnode previously suggested that “genuine bottom formation could be underway” after excessive leverage had been purged out of the system in the past two months. According to Bitcoin’s Market Value to Realised Value(MVRV), which measures periods where the cryptocurrency is over or undervalued relative to its ‘fair value,’ the metric is sitting at 1.02, recovering rapidly from 0.8 recorded by June.19th.
However, at the previous cyclical bottom in December 2018, the metric sat at 0.68 at one point. Thus, Glassnode added:
“This may mean further downside and/or consolidation time is required to establish a bottom. However, it may also signal that a greater degree of investor support exists in this bear cycle.”
“Crypto Market Is Bottomed”
In contrast to the conservative evaluation of the market condition, Alex Tapscott, managing director of Ninepoint Partners’ Digital Asset Group, believed the bottom is already in while not excluding the possibility of a retest of the $19,000 level. He noted:
“The risk-reward for Bitcoin is skewed heavily to the upside. For the long-term investor, this is a rare and tantalizing entry point.”
In an earlier interview with famed macro investor Raoul Paul, FTX CEO Sam-Bankman Fried (SBF) offered a similar take, saying the market had priced in the potential impact of the Fed raising the interest rate up to 3% this year. As a result, he believed the worst of the crash was already behind us.