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Bitcoin prices have collapsed after it touched an all-time high of $64,895.22 on April 14. The sharp crash in bitcoin prices on the back of tougher regulation in China and Elon Musk’s recent tweets on its high energy cost has made people question the revival of the oldest virtual currency. Currently, bitcoin is trading around the level of $36,000.
Experts, however, see the crash as a healthy correction after a massive bull rally over the last year. “While the markets have course-corrected in the last 3 weeks, we believe this is, in fact, a healthy dip that is necessitated before bitcoin and other cryptocurrencies can grow further in this current bull run,” Vikram Subburaj- co-founder and CEO of Giottus Cryptocurrency Exchange.
Bitcoin prices crashed to almost $30,000 level in May after China said cryptocurrencies would not be allowed and warned investors against speculative trading in them. Another reason has been Tesla CEO Elon Musk’s environmental concerns associated with bitcoin mining.
“Bitcoin, in particular, has been impacted by a drop of support from Elon Musk and news of a partial ban in China. We continue to see strong adoption among institutional investors who are making the best use of this dip to buy at lower prices. We would like to note that Bitcoin’s current value is still 12% higher than at the start of the year and has more than tripled from a year ago,” said Subburaj.
“We expect a reversal of trends later this month with Bitcoin breaking the $40K levels leading to new ATHs (all-time highs) this year. Once that happens and Bitcoin stabilizes, we will expect to see a disproportionate gain in other cryptocurrencies,” Subburaj added.
Experts say the decision to invest should also be based on the time horizon. For example, even after the sharp decline on May 19, most of the cryptocurrencies have recovered and their YTD returns still look healthy. YTD return is the amount of profit realized since the first trading day of the current calendar year. Bitcoin is currently showing a return of 25% since January, Ethereum is at 235%, and Cardano at 759%.