Cryptocurrency—Bitcoin and Ether hit another new all-time high price on Monday. Ether, the crypto token that underpins the Ethereum Blockchain network, rallied above $4,800 (roughly Rs 3.5 lakh), according to data from CoinDesk. While Bitcoin opened trading at an all-time high of $68,327.99 (roughly Rs 50.5 lakh) — gaining 3.37 percent in value to reach its historic high.
Interestingly, Bitcoin holders are stocking up more than 14 billion worth of Bitcoin in wallets. The new highs in crypto prices can be partly attributed to inflation and sliding bond yield prices. The cryptocurrency market is currently pumped up with massive positive momentum. The market attempted to reach fresh highs for the past week.
But is it just a crypto bubble? Crypto experts believe that it would be naive to dismiss the recent price rally in cryptocurrency prices as a bubble. Sharat Chandra, a tech evangelist, and a crypto expert told indianexpress.com that a price correction cannot be ruled out completely. “A lot of momentum is driven by the new investors including institutions who are warming up to digital assets especially bitcoin as a hedge against inflation,” he said. Not to forget the institutional players like JP Morgan, who are more bullish on Ethereum than Bitcoin.
“We are seeing an increased demand for crypto assets this year, particularly due to a surge in retail participants from all around the world. But on the other side supply has also been massively increased this year, currently, 13,000 and more cryptocurrencies are trading in the market, and 95 percent out of them could become worthless whenever the bear market will hit,” said Hitesh Malviya, expert, and founder of itsblockchain.com, a Blockchain cryptocurrency publication.
Meanwhile, Edul Patel, CEO and co-founder of Mudrex, a global algorithm-based crypto investment platform called the surge in price a classic case of a “bull run”. “The crypto fear and greed index points to 75, suggesting ‘greed’ in the market even after the new all-time highs. If we take a look at the crypto derivatives data, OTM or out-of-the-money, call options are much more expensive than out-of-the-money put options at the moment for both Bitcoin and Ethereum. It suggests that even the most aggressive traders are currently predicting a bullish momentum.”
Multiple factors culminated into this massive rally that we observed over the past few days. It began with the buying frenzy of Shiba Inu over the past couple of weeks. These factors and the fear of missing out by the retail investors have resulted in the markets reaching fresh highs.
“From the technical indicators, it was evident for some time that the markets were poised to make a massive upward move. However, this rally will eventually cool off because markets never move linearly higher. But that doesn’t mean we are in a bubble right now,” Patel explained.
What should investors do?
Investors and experts predict that Bitcoin prices are expected to go beyond $70,000 and touch the $80,000 mark. “I would advise against liquidating bitcoin and ether positions at this point in time,” Chandra notes.
Malviya has advised investors to hold their positions for a couple of weeks, as a potential 100 percent gain in the overall market cap will be witnessed in the coming days. “Gaming and metaverse-based cryptocurrencies have become a recent trend, investors can invest in such coins by following their risk management plan,” he added.
“Market corrections are likely to occur after the all-time highs are reached. Investors who are already invested could look at booking some profits. It might be a good time to play safe and pocket some of those profits,” Patel asserted.
(Disclaimer: Cryptocurrency is an unregulated space and digital currencies are not backed by any sovereign authority. Investing in cryptocurrency comes with market risks. This article does not claim to provide any kind of financial advice for trading or buying cryptocurrency.)