Bitcoin trader says expect more choppy, downside, and then sideways price action for BTC this summer
Discussion of the state of the crypto market has been a dominant headline in recent weeks, as non-crypto-based media urge Bitcoin (BTC) and DeFi investors to invest in assets with no fundamental value. At the same time, crypto-savvy analysts and traders have been pouring over charts, looking for clues that signal when the market will bottom out and reverse course.
Newbies are clearly nervous and a few have predicted the demise of the burgeoning asset class, but for those who have been around for several cycles, this new bear market is just another clearing fire that will eventually lead to a healthier ecosystem.
The next steps for the crypto market was a topic discussed in depth with Cointelegraph contributor Crypto Jebb and independent market analyst Scott Melker. The pair chatted about their views on why the value proposition for Bitcoin remains strong and what the price action for the top cryptocurrency might look like going forward.
Here’s a look at some of the main points discussed by Crypto Jebb and Melker.
Bitcoin is used as it was originally intended
Traders are primarily focused on Bitcoin’s spot price and bemoan the fact that it is not performing as the inflation hedge that many promised it would be, but Melker pointed out that performance largely depends on the country and economic condition in which a person lives.
Bitcoin may be significantly down in terms of the US dollar, but compared to countries like Venezuela, which is experiencing hyperinflation, or Nigeria, which has a large unbanked population, BTC has offered people a way to preserve the value of their money and transact on an open financial system .
One of the biggest features highlighted by Melker is that Bitcoin is the first real asset that has given people around the world the ability to opt out of the current financial system if it isn’t working for them.
According to Crypto Jebb, Bitcoin is thermodynamically sound, meaning he defined as the asset that holds the energy put into the system and doesn’t “leak” it out through things like inflation.
Which direction will the market take?
As for the future of the market, Melker made sure to emphasize that while it may not seem like crypto adoption is moving fast to those who have been in the market for years, “the adoption of Bitcoin is faster than the internet. It’s a hockey stick curve that absolutely goes parabolic.”
Both Crypto Jebb and Melker suggested that the paradigm shift towards investing in cryptocurrencies just needs more time because people who have been conditioned to invest in things like a 401k or Roth IRA and most investors are trained to fear risk.
Responding to possible critics who would cite Bitcoin’s volatility as a core reason to avoid cryptocurrencies, Melker highlighted the struggles that stock markets have had recently, citing the poor performance of stocks such as Netflix, Facebook, PayPal and Cathie Woods’ ARK fund .
Melker said:
“Last month was the first time I think I saw research from Messari that said there was not a single place where you could have basically put money into an asset class and store any kind of value. And if you stayed in cash, you lost 8% of your purchasing power by doing that.”
Related: Deutsche Bank analysts see Bitcoin recovering to $28K by December
Expect more downside in the short term
According to Melker, the current state of the market is bad, and in the short term it is important to remember that “the trend is your friend” and that further downside is likely.
That said, Melker indicated that there are some developments on the way that could help the market out of its lull, including the tightening cycle from the Fed that has historically put pressure on asset prices in the first three quarters of the tightening cycle until the market adjusts to the new reality.
Melker said:
“My best guess is that we have a very choppy, boring summer with low volume and low liquidity. Maybe we’ll post new lows, or maybe we’ll just cut around from $17.5K to $22K or $23K, something like that. And then it starts We really want to see what the market is made of at the end of the year.”
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The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.
