On Friday, May 13, Bitcoin rose about 13% to push past $30,000. After the May 12 drop, it recovered and climbed to around $26.7k, marking its lowest point since December 2020.
The Russian Association for Cryptocurrencies and Blockchain (RACIB) advised investors to take a cautious, wait-and-see approach.
“If there are enough reserves to ride out currency fluctuations, it is wise not to rush by disposing of crypto assets,” the group stated. The most recent widespread freezes of Russian funds abroad have shown that only the most decentralized digital currencies, like Bitcoin, can keep assets in the hands of the holder regardless of political or economic shifts. Currencies issued by certain entities, such as USDT or USDC, should be converted into decentralized forms, according to Yury Pripachkin, president of RACIB.
Chen Limin, chief financial officer and head of commerce at ICB Fund, shared a similar view.
“Excessive noise adds costs,” he commented. He noted that now may not be the ideal moment to invest in crypto, but potential buyers could consider entry later if they are ready to accept risk. “Cryptocurrencies show strong ties to US technology stocks since they belong to a high-risk class. Investors often buy on sharp price increases and sell at signals of trouble. The past two years have been favorable for crypto. Large-scale stimulus reduced returns on more stable assets and encouraged capital flight. Today, inflation and geopolitical tensions push investors toward safe-haven assets like U.S. government debt and the dollar,” he explained.
The expert underscored that this may be one of the least opportune times to take on risk.
“The trend has been forming since last year’s downturn, so it would be unfair to blame recent Federal Reserve actions for the latest Bitcoin drop. Market behavior shows that prices do not move in a straight line; reversals and pauses occur frequently. The current phase points to another decline, with Bitcoin possibly testing $20,000 and, in a worst case, dipping toward $5,000. The top cryptocurrencies could fall another 50% or more, and investors should plan for that. Crypto is often bought during dips and held for the long term,” Pripachkin noted.
Pripachkin, who also serves as RACIB president, added that the post-COVID economic disruption, which has evolved into a broader economic struggle between the West and Russia, has not yet fully manifested. As a result, there is little reason to expect a rapid shift in the behavior of major investors toward the crypto market or an immediate rise in Bitcoin’s price.
He also pointed out that the cost of mining remains a floor for Bitcoin. “If electricity costs vary region to region, the production cost stays near the floor of around $5,000,” he stated.
What drives Bitcoin price
There have long been attempts to link Bitcoin’s price with traditional asset classes. In its early days, supporters viewed Bitcoin as largely independent of currencies, indices, and commodities, making it an appealing diversification tool for portfolios. As the years passed, many analysts observed some alignment between Bitcoin’s price movements and the dynamics of gold, as well as an inverse relationship with stock markets.
Regulators and market observers in several jurisdictions have described Bitcoin as a commodity and sometimes refer to it as digital gold. Investors have used it as a hedge against major indices like the S&P 500. In 2020, Bitcoin futures began trading, providing large holders a way to manage risk and affecting market dynamics. Since then, professionals have often framed Bitcoin alongside traditional financial assets, linking its behavior to broader market trends.
In situations of inflationary pressure and tightening monetary policy, traditional investors tend to retreat from risk, leading to reduced activity in stocks and other risky assets, including cryptocurrencies and even major technology stocks. The shift often drives capital toward more liquid commodities and safe assets such as energy resources and food staples.