NEW DELHI: The euphoria in the crypto world seems to have calmed down over the past few months with bitcoin posting its third straight month of losses in June. For the world’s biggest cryptocurrency, this is the longest losing run since September 2019.
Moreover, gains in the first half of the year at 20% are lowest for the corresponding period since 2018. Before this, the digital asset had risen by 27% and 187% in the first halves of 2020 and 2019, respectively. In H1 of 2018, bitcoin had dropped 58%.
The rebuke by Tesla chief Elon Musk along with China shutting down bitcoin mining operations due to concerns over energy consumption has hit sentiment in the crypto market.
After a spectacular rally that saw bitcoin reach its all-time high of $64,804.72 in early April 2021, prices have moderated by 50% since to sub-$30,000 levels, which has concerned many investors.
As per data provided by blockchain analytics firm Glassnode, the seven-day moving average of bitcoin active addresses – ones active on the network as sender or receiver – hit the lowest level since April 2020, depicting the fall in demand for the digital asset.
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Returns delivered by bitcoin during the first half of the year are even lower than WTI crude oil, which has risen by over 50% to $73, as of 30 June 2021.
Despite tepid performance in bitcoin, the world’s second-biggest cryptocurrency, ether and Shiba Inu based-crypto token dogecoin have seen decent gains. While ether has jumped 212%, dogecoin has spiked over 4,000% since the start of the year.
According to experts, the recent fall in bitcoin prices offers an opportunity to investors to secure investments at a low cost.
“Smart investors across the globe are buying the dip. Crackdown by China, US monetary policy, mining restrictions by Iran, and regulatory uncertainty in India are some of the broad factors which may have contributed to the price drop. We are optimistic about the overall crypto market as bitcoin is slightly under pressure due to the rise of altcoins such as dogecoin, tether and cardano, among others,” said Shivam Thakral, CEO, BuyUcoin.
Industry professionals say that even as the short-term sentiment remains driven by news from China, there have been positive developments globally such as El Salvador adopting bitcoin that will accelerate the adoption of digital assets such as bitcoin.
“We remain positive about the long-term outlook of bitcoin while recommending novice traders to stay cautious considering the increased volatility in prices. Investors would benefit from adopting a long-term approach and may use the current consolidation phase to fortify their holdings. For short-term traders, watch for important support levels to make new positions while always maintaining a strict stop-loss to reduce risk.” A CoinDCX spokesperson said.
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