The price of bitcoin fell somewhat in mid-May, causing a bit of a scare amongst digital currency investors. However, analysts are telling them not to worry so much given the world’s number one digital asset by market cap is still about 65 percent higher than where it was at the end of last year.
Bitcoin… It’s Still in a Solid Place
During the month of May, bitcoin – after trading at $30K, a ten-month high – fell into the high $26,000 range. Analysts feel that much of the fear that surrounded the dip was premature in that bitcoin was still in a solid position compared with where it was in 2022, arguably the worst period on record for the currency and for crypto in general.
During that time, bitcoin fell by more than 70 percent from the all-time high it achieved in November of 2021. That was when it was trading for about $68,000 per unit. However, 12 months later, the currency had fallen into the mid-$16,000 range. It was a sad and ugly sight to see.
However, if this wasn’t bad enough, several other assets chose to follow in bitcoin’s footsteps and lost mountains of value as well. This ultimately contributed to the crypto arena losing more than $2 trillion in overall valuation over the course of one year, and it’s taken quite a bit of energy to bring these assets back up to their present levels.
Discussing the circumstances surrounding bitcoin and its previous rise and subsequent falls, James Butterfill – head of research at digital currency management firm Coin Shares – stated that the Fed and its endless array of rate hikes are largely to blame for all the madness seen over the previous 12 months. He stated:
There had been a big bubble. The bubble was pricked by the Fed.
Interestingly, Callie Cox – an analyst at crypto firm e-Toro – also threw her two cents in. Her opinion is unique in that she feels the collapse of FTX, while contributing to short-term disdain and troubles for bitcoin, made people flock to it more in the long run.
They were concerned about the lesser performances of smaller assets following the exchange’s death, and they all turned to tokens like BTC and ETH – more mainstream and legitimate in many eyes – as a means of ensuring their crypto portfolios could remain steady. She says:
Bitcoin has been the beneficiary of a flight to quality within the crypto industry. This is the crypto name that my mom and your family probably know.
So Much Junk Out There!
Butterfull was quick to agree, stating:
People are becoming a lot more discerning. There are 50,000 crypto coins out there and a lot of them are rubbish… Economic data continues to deteriorate. In that environment, bitcoin would be volatile and perform quite well.
