Bitcoin: Will It Keep Falling or Start Rising?
Traders are split into two groups: some foresee a deep correction, while others see an opportunity to buy Bitcoin at lower prices. Let’s examine the arguments on both sides.
Arguments for Further Decline:
- Bitcoin has reached its four-year cycle target, setting a new price record.
- A “double top” has formed on the chart.
- Long-term holders are taking profits.
- Retail investors are panicking and exiting ETFs.
- Old coins are being moved.
- Bitcoin is being sold by the US and German governments.
- Mt.Gox will refund over 140,000 BTC to former customers soon.
These events have shaken investors in recent weeks, bolstering negative sentiment. However, considered individually, the situation isn’t as dire.
For instance, the movement of old coins is linked to the consolidation of Mt.Gox assets before payouts (the exchange’s bankruptcy occurred in 2014). Additionally, profit-taking by long-term holders in June is still far from the peaks in March.
Arguments for Continued Growth:
- Bitcoin’s status as an investment asset is solidified through spot ETFs.
- Record institutional interest at the end of the first quarter.
- Global money supply growth.
- Global institutionalisation of crypto (e.g., MiCA law).
- Halving and ongoing outflows from exchanges to cold wallets.
- New companies holding reserves in Bitcoin (e.g., Metaplanet).
- More hedge funds including Bitcoin in their portfolios.
The arguments for selling are mostly short-term, while those for buying are long-term.
The influence of long-term factors is evident in the graph of money supply growth and Bitcoin’s limited supply. Each time central banks increased money supply, a new cycle of crypto growth followed. Now, central banks are at it again: this year, the ECB and the Bank of Canada have already reduced key interest rates.
Additionally, Bitcoin remains a highly volatile instrument, known for both explosive growth and deep declines. In this cycle, the drawdown is mild and atypical for a bull market, at 26%, whereas in previous growth phases it often exceeded 30%.
Cryptocurrencies involve complexity and carry a high risk of rapid monetary loss due to volatility and changing regulatory landscape. It’s crucial to ensure you understand how cryptocurrencies operate and can withstand the potential high-risk scenario of losing your assets.
This campaign is not region-specific and should not be interpreted as an invitation to engage in cryptocurrencies operations.
