Cryptocurrency restored half-year lows. When it is better to buy it

 

Cryptocurrency restored half-year lows. When it is better to buy it

In January, the value of bitcoin reached its lowest level since July 2021, and against the record-breaking November of the same year, the main cryptocurrency fell by almost half.

At the end of January, bitcoin is estimated at $ 33-38 thousand. In this article, analysts at the regulated cryptocurrency exchange Currency.com analyzed the reasons for the decline and possible scenarios for changes in the price of cryptocurrencies soon.

Compared to November 2021, the value of bitcoin decreased by 45 %. However, this is not a record figure: the approximate figures were recorded in July 2021, and in December 2018 the price fell by more than 80%.

Bitcoin has not become the only cryptocurrency that has rapidly lost value. Ether, which depends on it, continues to fall and fell by almost half from the November high. At the end of last year, the broadcast cost more than $ 4.8 thousand.

The value of Etherium from 13 to 26 January 2022 on the crypto platform Currency.com

Kazakhstan and the United States pressed the market

 

On January 1, bitcoin cost about $ 42,000, and on January 10 - less than $ 36,000. One of the reasons for the rapid decline, experts called the desire for the Internet in Kazakhstan during the protests. The country accounts for 18% of the world's bitcoin mining network capacity. Of course, the situation in Kazakhstan could not leave the cryptocurrency market unchanged, but at the same time the powerful impact on the cryptocurrency subsidence may be overestimated.

Another reason for the decline in bitcoin is the increase in the key rate of the Fed in March, against which the stock indexes S&P 500 and Nasdaq fell too much. In January, the correlation between the bitcoin exchange rate and the S&P 500 index reached a record high since October 2020.

There is a third reason that affected the January correction. The influential pressure of the International Monetary Fund on El Salvador, where it has been recognized as a means of payment since last year, is another threat to the value of cryptocurrency. The IMF did not support El Salvador's decision, and in late January demanded the withdrawal of official cryptocurrency status. The IMF hints that the $ 1.3 billion loans that the country expects from the IMF to restructure its foreign debt depend on meeting this condition. El Salvador's refusal to comply with the IMF's call could provoke a new round of correction.

What to expect?

The decline in bitcoin may continue and intensify. However, on January 21, Bloomberg analysts said that bitcoin is nearing completion of the correction, as the relative strength index (RSI) has reached a minimum. And in this case, there is usually a reversal of the trend and a return to growth. According to the agency, the last time the RSI of the cryptocurrency fell to its lowest level was in the summer of 2021, when the value of the asset showed a decline to $ 28 thousand, and therefore a possible jump.

The increase in the value of bitcoin may be influenced by mass acquisitions of assets by large investors. Now the latter is still waiting for an attractive price for mass procurement. Significant movement of prices uphill requires the high activity of "whales" - the largest investors.

In the past, large investors often bought large volumes of cryptocurrencies during downturns. Such actions, in the long run, can return bitcoin to the point of historical maximum.

 

Bitcoin reached a historic high on Currency.com cryptocurrency in November 2021

 

Is there the right strategy?

 

At the same time, the number of people willing to buy cryptocurrency on the slump has increased significantly. Investors who buy bitcoin, ether, and other altcoins on the downside can record profits as the market grows. During the period of consolidation and sale, another volatile "storm" may occur.

However, bitcoin should not be allowed to continue to fall. Therefore, the best strategy would be to buy the asset step by step in small amounts - for example, three days or a week. This will eliminate possible risks and get an attractive mediocre course.

The dynamics of the cryptocurrency market show steady growth even after significant declines. Therefore, in the long run, cryptocurrencies remain an attractive investment tool.

You can buy cryptocurrency on the regulated cryptocurrency exchange Currency.com. In addition to several dozen cryptocurrencies available for purchase, it can be used to trade more than 2,000 tokenized assets - tokenized stocks, indices, commodities, ETFs, currencies.

And if you lack knowledge, you can get it at Currency.com Academy, where you can study different types of assets, analyze the most popular strategies and find out about the terms. Currently, there are dozens of video tutorials, articles, and webinar recordings that will help you enter the trade as prepared as possible.

The message contains information about market movements, is not an investment study, should not be considered as investment advice, and is a subjective point of view on the object of the message of the author of the material. Preliminary indicators are not reliable indicators of future price dynamics.