The cryptocurrency market has been experiencing dizzying highs and jaw-dropping lows of late. This has raised questions about whether this downturn signals the start of a prolonged bear market or is simply a mid-cycle correction. The volatile swings in altcoins highlight this uncertainty.
Let’s dive into the details to understand this better.
Expert advice
Crypto Analyst No Bs Crypto has stepped into the recent chaos and backs his analysis on the cryptocurrency market with the famous quote from Baron Rothschild: “Buy when there is blood in the streets, even if that blood is yours.”
No Bs Crypto points out that history shows that downturns are often followed by strong recoveries, especially for those who invest during times of extreme volatility. Despite the current market stress, his analysis suggests that there could still be promising buying opportunities ahead.
What is causing market instability?
Several factors are contributing to the current market instability. Geopolitical issues, such as potential conflicts involving Iran and Hezbollah, have heightened market fears. In addition, Japan’s recent decision to raise interest rates has disrupted the carry trade, where investors borrow at low rates in Japan to invest in higher-yielding assets elsewhere.
This disruption caused repercussions on global financial markets, thus worsening the crisis.
Impact of the main actors
Major market participants are also having an impact on the market. Companies like Jump Trading and entities like Grayscale and the FTX domain have had to sell assets due to legal and financial pressures. These asset sales have intensified the downward pressure on the market, contributing to the recent price declines.
What should you do: keep or sell?
Despite the current negative sentiment, there are positive signs that the future is brighter. Large investors, or “whales,” are buying assets during these downturns, showing confidence in a market rebound. In addition, upcoming interest rate cuts in the United States and increased liquidity from the U.S. Treasury should support the market. Additionally, supportive measures from countries like Russia, which is advancing regulations on cryptocurrency mining, suggest potential positive changes.
According to Santiment, Bitcoin’s rapid rebound to $57,000 followed by bearish forecasts of a drop to $40,000-$45,000 shows the market’s tendency to recover quickly after extreme pessimism. This pattern has been frequently observed in 2024, where the peak in pessimism often triggers buying activity and rapid price recoveries.
What is the best approach?
As we navigate this volatile market, the big question is whether to hold on to our assets or sell them. This decision depends on your risk tolerance, investment goals, and the market outlook. While downturns are expected, it’s difficult to predict them perfectly.
It’s important to consider long-term goals and stay informed with expert advice, such as Cowen’s, to guide your decisions during these turbulent times.
Also read: Amid Market Recovery, Top AI Tokens to Buy for 100% Surge
