In a months-long crypto downturn first marked by the meltdown of Luna and associated “stablecoin” UST, investors have repeatedly warned of the coming “crypto winter”, a sustained period of trouble in an industry and market marked by volatility and lack of regulation.
The last winter lasted between 2018 to 2020, when Bitcoin (BTC) prices dipped almost 80% from a high of $19,000 at the end of 2017. Sub-$10,000 prices would continue for nearly 2 years until toward the end of 2020, when a combination of the Covid-19 pandemic, surge in retail investors, easy central bank policies, and belief in the technological future of cryptocurrencies caused BTC to surge to an all-time high of over $69,000.
As the crypto market never sleeps, the most recent weekend (crypto crashes tend to happen on weekends due to lower liquidity and margin calls, among other reasons) saw Bitcoin crash to below $18,000 on Saturday before rebounding back above the $20,000 range currently. Ethereum, the second-largest crypto by market cap, also dived at about the same time, dropping briefly close to $900 before rebounding to above $1100.
With cryptocurrencies’ current high volatility – BTC’s RSI has jumped from oversold to its current overbought conditions in just one day – there are plenty of opportunities to enter the market. In the past few days, roughly 55,000 BTC have been traded between prices of $18,000 and $23,000, a strong support and resistance level respectively for BTC.
For bears, the bottom has still not been reached. Joe DiPasquale, CEO of crypto hedge fund BitBull Capital, has emphasised the $17,000 support level for BTC, while other analysts have predicted bottoms that range between US$8000 and $14,000.
Dot-com billionaire and well-known crypto bull Kevin O’Leary has said that we have not seen the bottom of the crypto tumble yet – and that this is something that will ultimately be good for crypto.
O’Leary believes that more “panic events” need to happen – echoing what happened with Luna earlier in May – and expressed that “In the crypto world, we need someone to go to zero” so that what is risky or doesn’t work will be weeded out.
There are also those buying the dip – MicroStrategy CEO Michael Saylor has said that his company, which is the largest corporate BTC holder, will continue acquiring the asset based on BTC’s 4-year moving average, which sits around 21,000.
Given that significant crypto moves are now contingent on macro events like the Russia-Ukraine war, rampant inflation, and soaring interest rates, investors are now strongly advised to pay close attention to Fed Chairman Jerome Powell’s upcoming testimony before Congress. which will be happening on Wednesday, 22 June at 16:30 (GMT+3).
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While opportunities abound, investors are reminded that crypto is a highly volatile asset. As a friendly reminder, do keep an eye on market changes, control your positions, and manage your risk with extra care.