Time to invest in crypto?

Just above, slightly below and back again: For months, the total crypto market value has circulated around the symbolic 2 trillion mark, torn out – and fallen back again. Profit-taking and follow-up purchases are currently not free, the market is in a classic stalemate between the bear and bull camps. With a five percent increase, the market is once again preparing to recapture the key brand. A brief flare-up or a first attempt at liberation?

Crypto market in snooze mode

Minus 16 percent: The balance of the crypto market in 2022 is sober. At the end of March, the key cryptocurrency Bitcoin reached the level it had at the beginning of the year. The BTC exchange rate is currently around six thousand US dollars below that. Not to mention the record high of $ 69,000 reached in November 2021.

There is a drought in the crypto market – you would think. A look at some of the recipients from the last few weeks shows that this is only a partial explanation. About ApeCoin, Stepn, Zilliqa or more recently Dogecoin again: There is no shortage of outliers. Only the “fat” can be asked.

Has the old season started?

A typical pattern. When Bitcoin goes to sleep, altcoins attach. A development that is reflected in the Bitcoin dominance that has been stuck for several months. Dominance measures the share of Bitcoin’s market value in the total market. A share of just over 40 percent right now shows altcoin’s increasing influence in the crypto market.

Therefore, profits can still be realized in the market. The bikes for many altcoin rallies are mostly short-lived. So much the more lucrative for it. At least in the short term, investment strategies can be derived from hype topics such as Metaverse.

Bitcoin on its way to “Bullish Month”

The fact that the Bitcoin price service is looking for old strength is also due to a tense macroeconomic environment. According to BTC-ECHO financial expert Stefan Lübeck, “despite the negative effect of interest rate hikes by central banks the Fed and the ECB and a weakened stock market, there are also positive signals”. In the past, May was “traditionally more of 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 percent. But: Bitcoin performed historically better in April. A strong development in the past alone is no guarantee of forecasts.

Warm ride on the Hodl waves

A more valid indication of a long-term positive outlook is the Hodl waves. This indicator shows how long investors remain loyal to their bitcoin. Broader periods tend to be classified as bullish.

In terms of wave movements, “the relative weakness of the key cryptocurrency does not seem to worry investors among investors,” says Stefan Lübeck. “64 percent of all Bitcoin in circulation has now not been moved in at least one calendar year.” This is “an absolute high”. According to the trader, “long-term investors appear to continue to believe in positive price action in the coming months and years.”

BTC supply is declining

With 2.4 million Bitcoins currently available, stock exchange-held BTCs are at their lowest level since August 2018. The shortage of Bitcoin stocks should prove to be a value-creating factor in the future – especially if companies such as Terraform Labs stick to their aggressive purchasing policy.

The company behind the stablecoin network Terra and the LUNA token is currently building up $ 10 billion in bitcoin reserves. Since the end of January, Terraform Labs has bought about 42,000 bitcoin 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 should take place in the autumn – and make its mark on the overall market. Cardano could also trigger a small rally with June’s hard fork “Vasil”, while Polkadot starts filling up his parachain slots, Ripple could be home to a win against the SEC in the next few months, and Dogecoin from Elon Musk’s Twitter acquisition is euphoric. It would actually be an exciting time in the crypto market if it were not for the prices that have fallen asleep.

Disclaimer: This article merely reflects the author’s opinion and does not constitute investment advice, a buy or sell recommendation.

Do you want to buy cryptocurrencies?

eToro offers investors, from beginners to experts, a comprehensive crypto trading experience on a powerful yet user-friendly platform. *

To the provider

Leave a Comment