Time to invest in crypto?

Just above, a bit below and back again: For months, the total crypto market cap hovered around the symbolic 2 trillion mark, tearing up – and falling again. Profit taking and follow buys are currently not free, the market is in a classic lock-up situation between the bearish and bullish camps. With an increase of 5%, the market is once again preparing to win back the flagship brand. A brief bubbling or a first attempt at liberation?

The crypto market in snooze mode

Minus 16%: The balance of the crypto market in 2022 is sobering. At the end of March, the key cryptocurrency Bitcoin reached the level it had at the start of the year. The BTC rate is currently about six thousand US dollars lower. Not to mention the record of $69,000 reached in November 2021.

There is a drought in the crypto market – one might think. A look at some of the recipients in recent weeks shows that this is only a partial explanation. Whether ApeCoin, Stepn, Zilliqa or even recently Dogecoin: there is no shortage of outliers. Only the “bold” can be requested.

Has the old season started?

A typical model. When Bitcoin sleeps, altcoins celebrate. A development that is reflected in the dominance of Bitcoin blocked for months. Dominance measures the market capitalization share of Bitcoin in the overall market. A share of just over 40% currently shows the growing influence of altcoins in the crypto market.

As a result, profits can still be made in the market. The cycles of many altcoin rallies are mostly short-lived. All the more lucrative for that. At least in the short term, investment strategies can be derived from trending topics such as the metaverse.

Bitcoin is heading for the “bullish month”

The fact that the price performance of Bitcoin is looking for old strength is also due to a tense macroeconomic environment. According to BTC-ECHO financial expert Stefan Lübeck, “despite the negative impact of interest rate hikes by the FED and ECB central banks and a weakening stock market, there are also bullish signals.” In the past, May was “traditionally rather a bullish month with rising prices”.

Measured by the monthly growth rate, May is the third strongest month. According to Binance the average growth is 26%. But: Bitcoin historically performed better in April. A strong evolution in the past does not in itself guarantee the forecasts.

Hot ride on the waves of Hodl

Hodl waves are a more valid indication of a positive long-term outlook. This indicator shows how long investors stay loyal to their bitcoin. Larger timeframes tend to be classified as bullish.

Regarding wave movements, “the relative weakness of the key cryptocurrency does not seem to worry the hodlers among investors”, says Stefan Lübeck. “64% of all Bitcoins in circulation have not been moved for at least one calendar year”. It is “an absolute peak”. According to the trader, “long-term investors seem to continue to believe in positive price action over the months and years ahead.”

BTC supply shrinks

With 2.4 million Bitcoins currently available, BTC held by exchanges is at its lowest level since August 2018. The shortage of Bitcoin stocks should prove to be a factor of added value in the future – especially if the companies love Terraform Laboratories stick to their aggressive buying policy.

The company behind the Terra stablecoin network and the LUNA token is currently building up $10 billion in bitcoin reserves. Since late January, Terraform Labs has purchased around 42,000 bitcoins, according to data from Bitinfocharts. In the background, the course could be set for a crisp summer.

But not just for Bitcoin: one of the biggest events of the year is the long-awaited consensus shift at Ethereum. “The Merge” has since been postponed, but is expected to take place in the fall – and leave its mark on the wider market. Cardano could also trigger a small rally with June’s “Vasil” hard fork, while Polkadot begins to fill its parachain slots, Ripple could score a win against the SEC in the coming months, and Dogecoin from Elon’s Twitter acquisition Musk is euphoric. It would actually be an exciting time in the crypto market if it weren’t for the prices falling asleep.

Warning: This article merely reflects the opinion of the author and does not constitute investment advice, a recommendation to buy or sell.

Do you want to buy cryptocurrencies?

eToro offers investors, from novices to experts, a complete crypto trading experience on a powerful yet easy-to-use platform.*

To the supplier

Leave a Comment