Bitcoin sudden dip may be a welcome Development
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Early February experienced a huge increase in the price of bitcoin and other cryptocurrencies.
While bitcoin has experienced a massive fall to less than $48k after rallying beyond $58k in the last 3 days, a global leader in financial services, JP Morgan has analyzed in its report that offers insight into the world of fintech, blockchain and digital currency had said that bitcoin is overpriced and market volatility will increase if the bull run continues.
The report came at a time of bitcoin’s bull run occasioned by the attention given to it by world-leading investors across the world.
Recently, bitcoin has been competing with gold as the most valuable asset. JP Morgan strategist said that for the crypto coin to match the market value and remain in the market for long, it would have traded at least $146,000 which requires investors to take over the market.
While bitcoin continues its bull run towards $60k before experiencing a sudden dip to less than $46k, this may be a welcome development as JP Morgan analysts had said if the bull run continues without a dip, market volatility would increase and the price would crash.
This was said because the market is said to be immature. Hence, the reason for the rapid rise or fall in price.
When the market becomes mature, the price of bitcoin will find a reasonable range and remain there for a long time without massive rise and fall.
The bank analysis also showed its averment for USDT being the biggest tail risk of BTC. While citing the data from NYDIG, JP Morgan analysts believe that bitcoin’s trading volume is too dependent on USDT, when a financial loss occurs to USDT, it will, in turn, affect the crypto coin. This is because the NYDIG data claims that 50%-60% of BTC trade for USDT.
The bank shows its skepticism for cryptocurrency on whether or not it’s a financial innovation or speculative bubble. This was made expedient due to the events that determine the rise and fall in the price of the highly decentralized currency.
However, it concluded that “one decade’s bubble can become the next decade’s innovation.
How this affects your investment
If you are an investor, you are probably worried about how fast bitcoin dips lower. Just yesterday, bitcoin experienced a massive fall by losing more than $1,000 within 24 hours.
This was described by analysts as the daily biggest fall it would experience since its inception. While the dip may be depressing for investors, it is a welcome development as market volatility would have increased if the crypto coin had continued the bull run it experienced within the past 1 month.
Now that the bull run has been corrected, the price is expected to soar higher up to $75k by the end of March as predicted today by @Bitcoin Archive, a crypto enthusiast and price tracker.
One interesting thing about cryptocurrency is that you can hold it when the price increases, unlike Forex Trading. Save the coin you have now for later when the next bull run begins.
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