Should You Buy the Crypto Dip While Bitcoin and Ethereum Prices Are Down?


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In case you didn’t know, bitcoin It’s on discount right now.

That’s according to two experts and a major financial institution who say bitcoin is currently undervalued by $20,000. JPMorgan Chase recently valued the coin at $38,000, about 90% higher than its current price.

bitcoin could be worth up to $100,000 two years from now, and its fair market value is currently between $40,000 and $50,000, according to Jurrien Timmer, director of global macro at Fidelity Investments. Chris Brendlermanaging director and senior market analyst at DA Davidson, expects Bitcoin to rise back to nearly $38,000 by the end of this year and $50,000 by the end of 2023.

“Bitcoin is a unique animal because it’s hard to say exactly how much it’s worth,” says Brendler. “You tend to have these exaggerated moves to the upside when people are just buying because they want it to go up in value. When it starts to go down, those people come out. But the price of bitcoin will grow more than it is today in the next few years.”

So what does this mean for the crypto-curious who are potentially considering Bitcoin as an investment? Now is a good time to take advantage of the crypto market “selling” and invest?

The short-term risks of investing in cryptocurrencies may be worth its potential long-term rewards, according to some financial experts, as long as it doesn’t stop you from meeting your other financial responsibilities and you can clarify your long-term goals. beforehand.

Here’s what you need to know before investing in bitcoin and other cryptocurrencies amid the recession:

What is happening with the prices of cryptocurrencies?

Crypto markets and stock markets have had a rough year so far. Bitcoin, ethereum and cryptocurrency prices they have tumbled along with the stock market in recent months as investors grapple with continued rising inflation, Russia’s war against Ukraine, rising interest rates and recession fears.

The latest crypto market slump came after the May inflation report showed continued high prices for consumers and the Federal Reserve raised its benchmark interest rate by 75 basis points, the biggest increase in nearly three decades. Roughly $2 trillion was removed from the crypto market and the S&P fell into a bear market.

Bitcoin dipped below $18,000 on Saturday, a new low since December 2020, but struggled back above $20,000 on Monday. Bitcoin continued to hold above $20,000 on Thursday but is still nearly 70% below its all-time high of $69,000 in November 2021.

Ethereal meanwhile, fell below $1,000 over the weekend for the first time since January 2021 as the network braces for a massive and long-planned update. Most cryptocurrencies tend to follow the example of bitcoin. That means if the price of bitcoin is falling, ethereal and other cryptocurrencies are likely to fall as well.

Even so, some experts believe that the prices of bitcoin and ethereum could drop even lower. According to Kavita Gupta, a venture capitalist and founder of the Delta Blockchain Fund, it could be the beginning of a “crypto winter,” a prolonged period in which prices fall and stay low, as happened between early 2018 and mid-2020. says, based on its technical analysis of the market, that Bitcoin could drop to $14,000 and Ethereum could drop to $500 in the coming weeks or months.

Should I buy the dip? How to be smart when investing in cryptocurrencies

Experts say that now might be a good time to enter the crypto market while prices are low, but only after you have Assess your risk tolerance and prioritized other aspects of his finances, such as saving for an emergencypay off high-interest debt, and invest in a traditional retirement account like a 401(k).

If there’s one thing you need to know about investing in cryptocurrencies, it’s that it’s volatile and highly unpredictable. Values ​​fluctuate by the minute fueled by speculation, hype, and the vagaries of broader economic conditions. Potential investors looking to buy now while the market is down should understand that price fluctuations are normal and be prepared for prices to drop further. If you can’t handle wild swings in the market, you shouldn’t invest in crypto.

When it comes to your general crypto investment strategy, just enter what you’re okay with losing. Experts generally recommend investing no more than 5% of your crypto portfolio. Bitcoin and ethereum are the two cryptocurrencies that represent the best starting point for new investors, according to experts and NextAdvisor Investment Score.

Bitcoin has the highest score among all cryptocurrencies, with Ethereum just behind. Here is how bitcoin and etheruem stack up against the rest of the cryptocurrencies that are consistently in the top 10 by market cap, excluding stablecoins:

Updated June 23, 2022