Is the crypto market back in a bull-run?
IMPORTANT NOTICE: This article does not constitute financial advice and is for informational purposes only. Investors should be sure to consult a professional advisor before making any investment decisions.
After a huge market downturn that saw the price of Bitcoin more than halve from its all-time high of $64,804 on April 14 to trade below $30,000 on July 21, we have now seen the digital currency recover a large portion of its losses. On August 23, the price of one Bitcoin shot up again to just over $50,000. The question on everyone’s lips now is whether this is the beginning of a fresh bull-run for digital assets or a short breather in an otherwise long-term downtrend?
Crypto expert Keith Wareing says it isn’t time to party quite yet. It’s too early to rule out a bearish scenario, he warns, saying that $64,000 is the magic level to watch at which Bitcoin could experience a so-called “double top”.
Keith explains: “A double top is a classic trading pattern where the charts form an M pattern, which would revalidate previous bearish targets such as $24,000, $20,000 and $12,000 that I was looking at [back in July]. I can only imagine the McDonalds memes if the double top plays out.”
Keith is referring to predictions he made earlier this year, including a tweet on July 19 when he voiced expectations that Bitcoin prices would bounce between $24,000 and $29,000, before falling further still, potentially as low as $12,000. Obviously, this prediction hasn’t materialized — not yet anyway — but the crypto commentators say investors shouldn’t get too comfortable just yet.
McDonalds memes aside, Keith says Bitcoin investors would be wise to play it long up until the digital currency’s price reaches $60,000. After that, they should watch carefully for that $64,000 threshold, since a bearish scenario can’t be ruled out until this level is cleared once and for all, in his view.
“If we do clear $64,000, that’s when we can start to get excited again, as it’s likely we’ll far overshoot the previous all-time high, and that elusive $100,000+ for Bitcoin can be considered not just likely, but inevitable in the short-term,” he says.
Bitcoin at $100,000 seems like quite a prediction. From current levels, that’s 100% upside, which is certainly not something to be scoffed at. Inevitably, other digital assets would follow Bitcoin up to these heady heights, so a bull market for crypto would be guaranteed. However, a drop to $24,000, or even $12,000, would inevitably see another crash across digital assets which could be much more severe than the one we saw between May and July, when Bitcoin sank to $29,000.
Others have made wilder predictions still. For example, Netherlands-based analyst Plan B uses the Stock-to-Flow (S2F) model to predict the price of Bitcoin. This model, created in 2019, is based on Bitcoin’s scarcity (just 21 million BTC can ever be mined) and puts the peak of the current cycle anywhere between $100,000 and $500,000.
On the opposite side of the prediction fence, however, @CryptoWhale has warned on Twitter that investors should rush to take profits before a sustained bear market sees Bitcoin crash down to $7,000. Though he himself admits it’s an unpopular opinion, it’s hard for any investor not to wonder: what if?
It can be hard to know what to expect in the volatile world of cryptocurrencies. After all, we have already seen how quickly prices can move up and down. And while those wild predictions may never materialize, it’s important to keep in mind that things could still go both ways at this stage.
What does that mean from an investor’s point of view? Perhaps we will see a flurry of trading activity as those subscribing to one or the other view try to position themselves correctly. The wise investors will likely ensure they are diversified across various assets, hedge their bets (for example via DeFi passive income strategies), and sit back to watch how everything unfolds. For a long-term investment strategy, short-term price fluctuations are just market noise and shouldn’t make a difference. While prices fluctuate, the compounding effect will ensure that an investor’s assets continue to grow even as they wait for markets to correct.