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Does the cryptocurrency market offer the perfect entry point? The capitalization of the cryptocurrency is trading at the lowest level since October 2017; in the sense that coins have lost all the gains they had generated during the last year's bull run.
Source: coinmarketcap.com
The price of Bitcoin has fallen by 80% from its historical maximum; the biggest coin hit 14 months down $ 4100 this week. Its market capitalization was traded below $ 75 billion for the first time since the 2017 fiscal year. On the other hand, Altcoin feel more pressure on their price performance. Most of the altcoins hover around the lowest level since May 2017 – many of them are trading 90% below the all-time high at the end of fiscal 2017.
Bitcoin (BTC) Price today – BTC / USD
The selloff was surprising
The last selloff of cryptocurrency prices is quite surprising for some investors. The markets have remained stable over the last two months and economic operators have recorded positive relations with regard to institutional investments.
Goldman Sachs announced that it offers encryption and deposit services to its customers, while Fidelity has also expressed its enthusiasm for the cryptocurrency markets. The subsidiary ICE Bakkt also announced to launch bitcoin futures on its exchange – which many analysts believe would increase the inflow of institutional investments.
Traders and analysts blame the bitcoin cash fork for the latest collapse of cryptocurrency prices. Some traders also blamed the downward trend in US equity markets and the global economic environment for a selloff. The US markets have collapsed sharply in the last two months; Dow Jones and S & P 500 are in a negative tertiary year to date.
Is this a purchase opportunity?
Tom Lee, the Wall Street strategist and the Bitcoin bull, expects the crypto markets to recover in the days ahead. He argues that the downward trend in the cryptocurrency market is due to the specific event rather than to fundamental factors.
However, he is optimistic about the upward trend in the last quarter of this year. Explaining his position, he said, "The next wave of adoption is institutional. There is a crossover event. This is just an embarrassing transition. Institutional support will come soon. You will get it partly through an infrastructure, like Bakkt, which will be launched soon".
The price of Bitcoin is expected to reach $ 15,000 by the end of this year. Its price forecast is based on the concept of the price of mining breakeven; the analyst states that BTC's break-even cost is around $ 7,000, while BTC has the potential to trade twice as much as its breakeven level.
"Bitcoin has historically traded 2.5 times its extraction cost, so it is not excluded that it could be $ 20,000 by the end of the year" He added.
It is quite difficult to predict where the BTC price will move in the future. Tom is certainly right on the prospects for institutional investors with the launch of platforms such as Bakkt. Therefore, investors are advised to keep the cryptocurrency markets in mind before making any investments.
