Friday, May 13 well Bitcoin grew 13% to exceed $ 30 thousand. quotes It rebounded after the May 12 crash and rose to $26.7k, its lowest level since December 2020.
The Russian Cryptocurrency and Blockchain Association (RACIB) is confident that investors should adopt a wait-and-see attitude.
“If you have enough reserves to wait or survive currency fluctuations, you shouldn’t twitch and get rid of crypto assets.
The most recent examples of massive blocking of funds by Russians in the West have clearly demonstrated that only the most decentralized cryptocurrencies such as bitcoin guarantee digital assets will remain with the investor. Regardless of the political or economic situation of the world. Digital assets issued by certain companies such as USDT, USDC must be converted into decentralized digital currencies. “Bitcoin, the oldest cryptocurrency, carries the least risk,” said Yury Pripachkin, President of RAKİB.
Chen Limin, chief financial officer and head of commerce at ICB Fund, agrees.
“Excessive fuss leads to additional costs,” said the expert. According to him, now is not the best time to invest in cryptocurrency. But investors can take a closer look at buying in the future if they’re prepared to risk it.
“Cryptocurrencies are highly correlated with US tech stocks as they belong to the same class of risky instruments. They are bought relying on a strong price increase and sold at the slightest signal of impending problems. The last two years have been the best time for crypto. Large-scale stimulus in the past has reduced the returns of the most stable assets and created incentives for capital flight. “Now, inflation and geopolitical uncertainty are motivating us to seek protection in safe-haven assets: the US government debt, the dollar,” Chen said.
The expert emphasized that now is the most inopportune time to risk.
“This trend has been set for a long time – since last year’s fall, so it’s not fair to say that some recent Fed action is to blame for the recent drop in Bitcoin. This is just market characteristics – prices cannot rise or fall indefinitely, and reversals or stops occur all the time. What we’re seeing now is another phase of the decline, the next target for bitcoin is $20,000. However, prices could drop to $5,000. The top cryptocurrencies could drop at least another 50% and you should be prepared for that. Cryptocurrencies are selectively bought during price drops and over the long term,” he explained.
RAKİB President Yuri Pripachkin also agrees with this estimate.
“The fact that the post-COVID world economic crisis, which has turned into an economic war between the West and Russia, has not yet fully manifested itself is quite obvious. Therefore, there is no particular reason to expect a change in the position of large investors with regard to the crypto market in the near future and, accordingly, an increase in the bitcoin rate,” he said.
According to Pripachkin, the price of bitcoin cannot fall below the cost of production – mining. Today that level is around $5,000, depending on the cost of electricity in certain areas of mining farms.
What determines bitcoin price
“Attempts to deduce a correlation between the bitcoin price and other traditional asset classes have been made since its initial success in international markets. For a long time, supporters of the main cryptocurrency chose bitcoin as an unrelated financial asset due to its low or no dependence on all indices, currencies and commodities, among other distinctive concepts. This makes it an extremely attractive diversifier for an investor’s portfolio,” said Pripachkin.
According to him, starting from the decade of bitcoin, many experts began to note the similarity between the price dynamics of the main cryptocurrency and the movement of the gold ratio, as well as the inverse relationship with the stock market.
By this time, regulators in many countries have compared bitcoin to gold, characterizing it as a commodity. At the same time, the term “digital gold” emerged, now used as a synonym for bitcoin, and bitcoin itself was used by investors as a hedge asset against the S&P 500 index.
“In 2020, bitcoin futures contracts appeared for the first time, providing large crypto holders with a means to lower their rates. From that moment, the concept in the crypto market changed: professional investors began to consider bitcoin alongside traditional stock market assets. This brought together the dynamics of the crypto market and the S&P 500 index.”
In his view, in the context of the global economic crisis, high inflation in the United States, and the consequent tightening of monetary policy by the Federal Reserve System, this is why traditional investors react traditionally again – they stop investing. stock market and any risky asset. Including cryptocurrencies and even Big Tech. Instead, money is invested in more liquid assets such as energy, fertilizer, wheat, food.