Bitcoin has plummeted 50% since March. What’s happening? Is it time to sell cryptocurrencies? Or, conversely, buy?

Winter or frost?

Experts assess the state of affairs in the crypto market in different ways. “The crypto-winter is severe and the market can cover a cataclysm in the form of another collapse and a slow price recovery, which can drag on for several years,” Vladislav Antonov, a financial analyst at BitRiver, believes. “After the pandemic, G7 central banks printed a lot of money to support economies. And now they do not know how to contain high inflation due to the energy crisis. The US Federal Reserve is fighting inflation by raising rates. The tightening of the monetary policy of the Fed strengthens the dollar, increases the yield on government bonds and puts pressure on the stock market. Cryptocurrency is a risky asset class, so a selloff in stocks causes a selloff in cryptocurrencies.”

Analyst FG “Finam” Leonid Delitsyn also connects the collapse with the general economic situation. The influx of new money into cryptocurrencies is declining amid record inflation in the United States and an increase in the key rate in the US Federal Reserve. This in turn will affect the availability of credit. “Large investors prefer to invest in cryptocurrencies with money that is easy to get, in conditions where they can be borrowed profitably at any time,” he notes.

However, not everyone agrees that the crypto market is in a systemic crisis. “We are seeing jumps, but rather a “subsidence” in the most popular cryptocurrencies, says Olesya Desyatnichenko, Associate Professor at the Department of SZIU RANEPA. — There is nothing special here, since the cryptocurrency market has always been and will be highly volatile. People who invest in it should understand that today they can buy bitcoin for 30 thousand dollars, tomorrow – for 40 thousand, and the day after tomorrow, for example, for 25 thousand. And in this situation it is impossible to build complex or at least some models. It is difficult to say that this is “winter”, but the fact that these are frosts is obvious.

Crypto investor Andrei Ryabykh even believes that the current fall is only part of the general cyclicality of the crypto market. “The exchange does not produce money, it redistributes it,” he insists, “there are people who bought bitcoin for 40 thousand dollars, even 60 thousand, now they need to be persuaded to sell it for 20 thousand. This is not easy to do, so there is an injection so that non-professionals come out, and professionals would buy cryptocurrency at low prices. It is unlikely that this happens in a centralized manner, just specialists think in one direction and push the cart in one direction.”

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