Bitcoin has been moving in conjunction with other risk assets. Yesterday, we saw a spike low to $35,000, marking a major capitulative zone for BTC. Right now there is extreme fear in the crypto market, with many retail investors believing that Bitcoin will soon crash to $30,000 to $28,000. Even though we expect to see a retest of these levels, it will take many more months before we have a crash of that magnitude. Bitcoin should resume its rally in the days ahead after it finishes this significant spike low.
In previous Bitcoin cycles, the crypto market moved at a faster pace than it does presently. Due to more capital coming into crypto globally and the availability of more financial instruments linked to Bitcoin, the rally we expect to see is taking longer to occur. However when we do see a decisive rally in BTC, altcoins should begin to go on rallies of their own.
One of the benefits and drawbacks of investing in digital assets is the volatility investors see. For example, during Bitcoin’s early days the lack of liquidity led to intense price swings in both directions. Bear markets were more pronounced while bull runs delivered returns exceeding 1000%. In terms of this price volatility, Bitcoin’s best days are behind it, and as a consequence, the best ROI can now be found in the altcoin market.
When it comes to the adoption of this technology, certain networks will be the new operating system of private companies, supply chain managers, video games, and the financial system. As more money pours into crypto, the level of volatility in the altcoin market will drop. As a result, we believe it is worth sitting through frustrating price fluctuations such as these if it means getting the same returns as early Bitcoin investors.