Bitcoin rebounded above the US$20,000 mark yesterday as wealthy investors scooped in to purchase cheap coins, believing they have long-term growth potential and the current market volatility is merely caused by temporary “panic sales”.
Bitcoin plunged to $17,708 on Sunday, the lowest since December 2020, while Ethereum dropped to a two-year low of $880 before recovering to $1,000 mark yesterday.
Swings in the value of cryptocurrencies in recent weeks have been caused by heavy sell-offs triggered by inflation, causing investors to turn bearish on risky assets.
The collapse of TerraUSD and Luna were also a significant jolt to investor confidence in the system.
According to Al Jazeera, NATO warned the uptrend in energy and food prices may continue for a long time as the war between Russia and Ukraine will likely last for a few more years and have prolonged effects on the global economy.
The likelihood of a concurrence of an economic recession, high inflation and high interest rates have led investments in risky assets such as stocks and cryptocurrencies to become bearish.
According to CoinGecko.com, the total value of the cryptocurrency market was $922 billion, up 7.78% over 24 hours as of 2.07pm yesterday.
The Bitcoin price was $20,103.5, up 9.3% over 24 hours, but still down 70.8% from its peak on Nov 10, 2021.
Akalarp Yimwilai, chief executive and co-founder of Zipmex Thailand, said the market sentiment for all risky assets, including stocks, gold and crypto, is pressured by central banks’ more hawkish monetary policies and interest rate hikes, high inflation and oil prices, and prospects of a economic recession.
However, he believes now is a good opportunity to invest in cryptocurrencies because their prices are laggard and they still have potential for growth in the long term as many major investors still support cryptocurrencies.
According to consultancy Capgemini’s World Wealth Report, which surveyed 2,973 high net worth investors around the world with wealth ranging from $1 million to more than $30 million, 71% of them invest in digital assets.