Bitcoin’s price rose back above $21,000 Friday — rallying from its drop below $19,000 on Tuesday, which was its lowest point since June.
Still, some experts say September could be a tough month for the most popular and most valuable cryptocurrency. Economic challenges in the U.S. and abroad continue to throttle the stock market, which bitcoin and the crypto market have increasingly tracked in recent months.
One reason bitcoin continues to see rallies within the broader downward trend is that every move down is immediately met with large orders of bitcoin mainly from big wallet addresses, which are likely institutional investors, according to Martin Hiesboeck, head of blockchain and crypto research at Uphold. In other words, institutions are buying up bitcoin, while everyday investors are largely holding off.
Many investors are concerned the macro economic outlook won’t improve anytime soon, so they sell every price increase,” Hiesboeck says. “At the same time, institutions and savvy investors seem to think that bitcoin has formed a bottom and continues to accumulate. The fact it hasn’t dropped significantly over the past weeks as we digested some really bad news is a turning point.”
Several macro economic factors — such as surging inflation, geopolitical crises, and rising interest rates — continue to drive extra short-term volatility in the crypto and stock markets. The crypto market has continued to move in tandem with the stock market in recent months, which makes it even more intertwined with global economic factors.
Bitcoin’s high point of the year so far remains in the earliest days of January, when it nearly hit $48,000 on Jan. 2. Bitcoin has lost roughly 70% of its value since its Nov. 10 all-time high above $68,000. While Bitcoin’s price has seen multiple big drops since November, its new highs in 2021 and current price are still an impressive feat considering its humble beginnings and a price below $10,000 as recently as July 2020. Ethereum — the next most popular crypto — notched another new all-time high of its own when it went above $4,800 in November.
Prices updated: September 12, 2022
Though Bitcoin and Ethereum have both had ups and downs short of their all-time highs since then, many experts still expect Bitcoin’s price to exceed $100,000 at some point.
The volatility highlights a durable truth for Bitcoin: it is still a highly volatile and speculative investment. In fact, the last time the original cryptocurrency set a record high in mid-April, it abruptly lost over half of its value and plunged to around $30,000 by mid-July. Similarly, Bitcoin dropped back below $35,000 this month not long after its most recent November high.
So what should crypto investors do in light of this volatility? Nothing, according to the experts we’ve talked to. Given the crypto’s history of volatility, this increase doesn’t guarantee a long-term reversal. Bitcoin’s price is just as likely to fall back down as it is to continue climbing. The future of cryptocurrency is sure to include plenty more volatility, and experts say that’s something long-term crypto investors will have to continue dealing with.
Source - https://time.com/nextadvisor/investing/cryptocurrency/bitcoin-price-increases/
