Given that bitcoin has endured such a sharp drop, is now the time to buy? This is a question that several renowned financial analysts – including Michael Binger, president of Gradient Investments and Gina Sanchez, CEO of Chantico Global – have been trying to answer.
Bitcoin Still Remains Quite Vulnerable to Price Swings
Bitcoin initially rose to a new all-time high of approximately $64,000 per unit in mid-April. However, from there, the world’s number one digital currency by market cap has seen a series of price drops that ultimately took it down to the low $30,000 region at one point, constituting a loss of more than half its value from two months ago.
It looks like, however, bitcoin may be starting to rise again given that the currency has jumped by about $5,000 in just the past few days from $32,000 to roughly $37,000 at press time. This is making many people believe that the currency may be trying its hand at another bull run and they are questioning if they should buy before things get too expensive and hairy.
Binger says that one of his biggest concerns regarding bitcoin as of late is its alleged lack of security. He says that the space is largely unregulated, which is why he cannot always condone his clients getting involved in crypto. He states:
I understand that crypto is a global currency. It is unregulated. I understand that some may be concerned about U.S. inflation and a weakening dollar, but I still think that gold is a better hedge if those are your concerns… Crypto is just way too volatile, way too speculative for our client base. I really think the crypto market is more for retail traders who are trading on price momentum both up and down and a handful of corporations that are willing to take a swing at it.
A Ruination of Speculative Assets?
Sanchez offers similar sentiment, and goes so far as to say that bitcoin hurts all speculative assets in some way:
We are still sellers of bitcoin. The broader market and the economy, quite frankly, are showing a lot of money shifting back and forth into the economy through consumption and through investment, and it is hurting all speculative assets… Bitcoin lands solidly in that space as a speculative asset, but we are also seeing SPACs and IPOs all get hit all at the same time, and we see this as just a sign that money is moving away from speculation back into the real economy.
While bitcoin saw its price explode in 2020, this was also a sign that its volatility had not improved much over the past few years, with the currency jumping from under $4,000 at one point to nearly $30K by the end of the year. From there, the asset exploded in price and more than doubled its end-of-2020 mark, reaching a $60,000+ figure just a few months later.
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