The fall of cryptocurrencies has only just begun. Analysts expect the price of Bitcoin to register a further decline.
The cryptocurrency market is not ready to go up again. Interviewed by the media CryptoSlate, Russell ThomsonCEO of digital asset management firm LibertyRoad Capital, said the sector is likely to encounter further turbulence.
For the past few weeks, the entire crypto-asset market has been in the red. The price of Bitcoin crashed around $20,000, the most unseen since late 2020. Ether contracted in the $1,000 area, chipping away at miners’ profitability.
The decline of cryptocurrencies is not over
For Russell Thomson, the bottom has not yet been reached: “There is no sign of bottom yet. And we have to hit rock bottom for this market to recover.”. Before hoping for a rebound, the price of cryptocurrencies should therefore fall further.
Most analysts share Thompson’s pessimism. This is the case of Nicolas Chéron, strategist at ZoneBourse. Interviewed by journalists from 21 Millionthe expert considers that it is too early to envisage the end of the crash : “We are still in the midst of a bear market, both in the Nasdaq and in cryptos, for the simple reason that liquidity is being tightened on a large scale in the financial markets”.
Faced with uncertainty in the crypto market, Russell Thomson prophesies a new collapse of king bitcoin : “our Bitcoin price target was around $17,000 and $20,000. Unfortunately, I think the actual price target is now lower than that”.
The ongoing decline is not unusual for the cryptocurrency industry. Since its inception in 2009, Bitcoin has often lost 80% of its value before recovering. The evolution of the queen of cryptocurrencies is marked by bearish and bullish phases of extreme volatility.
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The impact of the Celsius collapse
Marcus Sotiriou, crypto analyst at digital asset broker GlobalBlock, believes the decline was made worse by the Celsius affair. After the crash from UST in May, the platform has lost considerable sums. Blockchain analyzes speak of a loss of 500 million dollars.
“Crypto markets are collapsing in part due to the risk of insolvency of one of the largest lending platforms, Celsius, after it was widely speculated that they were irresponsible with customer funds », Marcus Sotiriou analysis.
close to default, Celsius froze the assets of its clients. The company has suspended withdrawals and transfers until further notice, causing panic among its users. The GlobalBlock analyst believes Celsius was unable to reimburse all users who withdraw their money.
“I think there could be even more downside for crypto as a result of the Celsius liquidity crunch and its impacts… I think there is concern by many that a liquidation cascade may occur,” adds Russell Thomson
Nearly 1.7 million investors would be affected by a possible bankruptcy of Celsius. Other key players in the ecosystem are in a bad position. This is the case of the investment fund Three Arrows Capital (3AC), which would soon be insolvent, and of the protocol Bancor (BNT).
No increase before 2023?
Under these conditions, it seems that the fall of cryptocurrencies is set to last. Russell Thomson does not anticipate no recovery until next year. Still correlated to traditional financial markets, Bitcoin follows the same movement as stock market indices. After the US Federal Reserve’s rate hike, these indexes should be down for several months.
“I think the bear market could extend into the end of the year, but I think 2023 will be positive for US equities and cryptocurrency,” says the analyst.
Optimistic despite crash, Thomson expects Bitcoin price to rise the $100,000 mark by the end of next year. For his part, Du Jun, the co-founder of Huobi, one of the largest crypto-asset exchange platforms, is betting on a new bullish phase from 2024.
Asked by CNBC last February, the manager had anticipated the meteoric decline of the market. Du Jun already perceived the ” early stages of a bear market » several months before the crash. Assuring that the usual Bitcoin cycle keeps repeating itself, he recommends waiting until the end of 2024, or even the beginning of 2025, for the cryptocurrency sector to explode again.