Market reaction to yesterday’s Fed rhetoric was sluggish. Powell said it is too early to talk about phasing out stimulus – the labor market is still weak despite a significant recovery.
So the reaction of bitcoin turned out to be restrained. Now he does not have a driver to exit the side. While this dynamic continues, let’s discuss long-term trends.
An interesting survey of experts caught my eye on when to wait for crypto winter. Since the cryptocurrency market, like others, is cyclical, a period of “cold snap” is also inevitable. This is a protracted decline like the one we saw after the first all-time high in 2017.
It is worth noting that in the digital currency market, cyclicality is associated with halving. For Bitcoin, after every 210 thousand blocks are mined, the miners’ reward is halved. As a result, the influx of new coins to the crypto market is slowing down. And when there is a shortage of supply, the price rises. For the main cryptocurrency, such halvings occur approximately once every 4 years.
As we remember from the history of 2018-2019, bitcoin at some point dropped to almost $ 3,000, after which it grew to more than $ 60,000. This means that the time of crypto winter is the best time to buy promising coins with a significant discount.
The question now is when will it come. Crypto experts differ on this point. For example, Martin Petkov of StormGain believes that a crypto winter should be expected after central banks launch their cryptocurrencies (CBDC). For example, China is working hard on the digital yuan, but the pressure on miners there is starting to increase.
China’s CBDC is likely to appear first, followed by the digital dollar. Although, the latter will probably not happen before 2022.
He is not alone in this position. Vladislav Akeliev from ECOS notes that the launch of the CBDC is likely, but not necessarily, to bring Bitcoin down. He believes that crypto winter can last a long time – until the issue with the niche of cryptocurrencies and the issue of regulation is finally resolved.
But the fact that now, unlike 2017, an increasing number of institutions are entering the market suggests that there will not be such a panic sell-off. Unlike retail investors, large players are often willing to hold on to a potentially profitable asset for a long time.
As for the timing, crypto winter is predicted not earlier than in 2-3 years. Therefore, the current decline may remain only a downward correction. And the uptrend is likely to be flatter.
Meanwhile, locally, bitcoin remains within the sideways range between the support of 53,980.47 (lower blue dotted line) and the resistance level at 100 by Fibo Expansion (55793.92). The horizontal 53980.47 is being persistently tested for strength, which creates preconditions for a possible decline to the area of $ 52,000 per coin.