Crypto markets may have finally bottomed out. Does that mean it’s time to buy?

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Crypto markets may have finally bottomed out.  Does that mean it’s time to buy?
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The roller coaster ride that is crypto continues.


Key points

  • Both Bitcoin and Ethereum stocks have seen consistent gains over the past few weeks.
  • JPMorgan analysts are bullish, saying “crypto markets have bottomed out.”
  • The upcoming Ethereum upgrade has been cited as a major source of the market rally.

In recent years, the cryptocurrency the market had very high highs – and very low lows. Multiple coins peaked last fall, with Bitcoin (BTC) exceeding $68,000 a coin and Ethereum (ETH) valued at over $4,600.

Then came the summer crash. Many mainstream cryptos have fallen, with even Bitcoin hitting its lowest point since 2020, dropping below $20,000 a coin. The total market value of cryptocurrencies fell below $1 trillion for the first time since the start of 2021.

Now the the crypto downturn may be over. Major currencies Bitcoin and Ethereum have both seen recent jumps, and total crypto market the value once again slightly exceeded the $1 trillion mark.

It seems that the analysts are — cautiously? — optimistic. Last week, JPMorgan analyst Kenneth Worthington was quoted in a note to clients as saying, “It appears crypto markets have bottomed out despite still depressed trading volumes.”

A Crypto Bounce

Experts cite a number of sources for recent crypto market recovery. This general optimism is, in itself, a potential reason for market improvement; a speculative investment like crypto often relies on positive market sentiment.

Part of this optimism seems to stem from the dissipation of the aftermath of Terra’s May Collapse. The failure of the stablecoin had wide effects that spread to multiple currencies and negatively impacted the entire crypto market.

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According to JPMorgan, however, the real driver of the recent recovery “has been the Ethereum merger and the positive data following the launch of the Sapolia testnet in early July and the Ropsten testnet in June, indicating that the merger is viable in 2022.”

The highly anticipated Ethereum Upgrade has been in the works for years and will move the popular blockchain from a proof-of-work to a proof-of-stake network. The latter system is considered faster and more energy efficient.

Analysts expect the merger to take place in September. If successful, this should be a boon for crypto markets and could help boost still depressed values.

Is it the right time to buy?

As a general rule, it is better to buy low than to buy high when it comes to long-term and speculative investments. In this respect, now could very well be an excellent time to jump into the crypto market. Prices are still well below their 2021 highs, with Bitcoin trending around the $24,000 mark and Ethereum below $2,000.

If the crypto has truly bottomed out, as JPMorgan predicts, then there is nowhere to go from here but up. And a successful Ethereum merger in September could be the catalyst for a strong comeback this fall.

However, as optimistic as analysts may be, there is no guarantee that the crypto is out of the woods yet. If the Ethereum upgrade fails for some reason, all that optimism could evaporate.

Then there’s the global energy crisis that continues to impact markets – something that is likely to get worse as winter hits the northern hemisphere. Moreover, although inflation fell slightly in July, it is still well above average. This, together with recent Federal Reserve activity, has undoubtedly made investors wary of getting back into high-risk investments like crypto.

There is also the ever-present danger of increased regulation. Congress is weighing in on the future of crypto, and it’s unclear what impacts it might have on an already tenuous market.

Overall, it’s hard to say if the crypto has really bottomed out. There’s always a chance that it will fall back – or, worse, sink even deeper. Whether it’s worth it depends on your own tolerance.

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