The crypto market has been interesting in the last few weeks. After sustaining a bearish momentum for weeks, the market turned green recently, with assets experiencing a short relief. The relief rally is however long over, and the bearish momentum has kicked in again.
This time, the bearish condition has worsened because of investor sentiment which is moving against the crypto market in general. Bitcoin broke below $26,000 for the first time since mid-March, a situation that seems quite extreme.
YouHolder chief of markets, Ruslan Lienkha told The Block that this is as a result of investors withdrawing from risk assets.
“We are experiencing an outflow from risk assets, but not so critical at the moment as the market expects even higher yields for long-term bonds in the near future,” he said.
As usual, the crash hasn’t only affected Bitcoin, but largely the entire crypto market. Most of the top crypto assets are already in the red, but Lienkha said the situation will intensify with time, “and put additional pressure on bitcoin despite some possible positive internal factors in the crypto market.”
Meanwhile, Ethreum has also lost a significant percentage of its value as its co-founder and CEO, Vitalik Buterin transferred 600 ETH valued at about $1 million to Coinbase. This has sparked speculation that Buterin may be planning to sell, causing further sell-off of the asset.
All hope is not lost
There are many reasons why Bitcoin’s price may fall further, the most probable of which is more selling pressure that Lienkha anticipates. However, all hope is not lost. According to the analyst, there are other factors that can still revive the price of Bitcoin, and by extension the whole crypto market in the short to medium term.
“Bitcoin could benefit from the halving next year, broader adoption of crypto, the growing institutional interest and more jurisdictions with proper transparent regulation,” he noted.
Bitcoin halving is the reduction of Bitcoin’s miner rewards by 50% roughly every four years. The next halving is expected in 2024, and as usual, Bitcoin supporters and investors eagerly look forward to its effect on the price of the asset.
The crypto industry also looks forward to wider adoption of Bitcoin and cryptocurrencies in general as more institutional investors continue to come into the space. As this happens, and especially if a Bitcoin spot ETF is approved, the price of the asset is expected to increase dramatically.
Regulation is another challenge that faces the crypto industry, particularly in the U.S. where there is no proper regulation but severe clampdown on the industry.
However, things could change soon as the lawmakers are working on legislation for regulating the industry, which could increase the positive perception of the industry.
Market overview
At the time of writing this story, Bitcoin is down 10.98% in the last seven days and a marginal 0.12% in the last 24 hours. This suggests a sign of recovery already, which is similar to what most top altcoins are showing, including Ethereum.
As mentioned by Lienkha, the crash in the market may worsen, bringing the price of Bitcoin to lower levels and the entire market together with it, or there could be a short relief in the short term before a further dip. Whatever the case, it is better to proceed with caution for now.