The key factor in the current decline in cryptocurrency quotations is the sell-off in the stock market and the strong strengthening of the dollar index. However, the failure of bitcoin at the moment of the $57,000 level indicates a local correction rather than the beginning of a bearish phase, experts interviewed by ForkLog believe.
In this article, we look into whether the market still has the potential for further growth.
What is putting pressure on the price of cryptocurrencies?
Bitcoin is under pressure from the fear of market participants regarding the slowdown in the rate of reduction of the key rate, according to Lennix Lai, commercial director of OKX.
According to him, due to disappointing inflation data, investors believe that a reduction in the key rate will not occur until the second half of 2024, and some even doubt that the US Federal Reserve will be able to fulfill its own plans and reduce the key rate three times a year.
Lai pointed out that the fear and greed index dropped to a neutral level of 52 points, whereas back in March it exceeded 80 points.
"On the eve of the outcome of the Fed meeting, market participants are pessimistic. They are waiting for a signal from the regulator that a decrease should not be expected earlier than inflation is brought under control," the expert said.
Another indication of the depressed investor mood is the lack of excitement around the launch of bitcoin ETFs in Hong Kong. Low trading volumes and demand for the instrument led to a reduction in the positions gained on bitcoin and Ethereum, which put serious pressure on the price.
After bullish movements amid expectations of halving and the launch of spot bitcoin ETFs in the United States, the crypto market needs new incentives.
"The key rate in the United States and inflation will be the main factors affecting the crypto market in the near future. If the Fed decides to lower the rate, the crypto market will receive an impetus to growth," Lai said.
Trader Vladimir Cohen calls the main reasons for the decline in prices that occurred on April 30 and May 1, the withdrawal of investors from risk, the sell-off in the stock market and the strong strengthening of the dollar index.
"On the eve of [Fed Chairman] Jerome Powell's press conference, bitcoin has doubled in 100 days and it is logical that such rapid growth leads to a correction. At the moment, it is only 22%. If we take the standard Fibonacci retracement — 38.2% — this will be the level of $45,000," he explained.
At the same time, Cohen believes that the uptrend in the crypto market remains in force:
"On the contrary, such a correction will attract more buyers and give a stronger impetus for further growth. Bullish cycles last two to three years, and we are in the first half of it. The main growth will begin in the fall of 2024."
According to him, in the current cycle, all corrections did not exceed 25%. Accordingly, this time it will probably stop at the $50,000 level, in which large players will begin to gain positions.
Short-term forecast for the price of Bitcoin and Ethereum
According to Vladimir Cohen's forecast, in the near future bitcoin is likely to move into the trading range of $50,000-58,000, or $48,000-55,000, provided that the Fed does not hint at a rate cut in September.
Ethereum has so far followed the first cryptocurrency, although, unlike it, it has not been able to rewrite or at least reach past highs. It is worth considering the disappointment that the chances of launching an Ethereum-ETF in May are minimal.
"I don't think that the ether will be actively sold. It is more likely that it will stop in the trading range of $ 2800-3200 and in May-June it will definitely start growing faster than bitcoin, when the main negative on the asset will be won back," the trader added.
The demand for Ethereum from institutional investors may lead to a dump, but Cohen draws attention to a very powerful level of support for the coin — $2,500. Even if it reaches it, the rebound and return to $3,000 will be fast.
Coins with the best returns in the current bull rally
According to Vladimir Cohen, over the past year, Solana and its ecosystem have demonstrated the best performance, in particular, memecoins showed the highest percentage return, with the help of which they promoted the "initially failed" second model of the Saga Web3 smartphone.
Among the promising tokens of the ecosystem, the trader singled out Jupiter (JUP), Jito (JTO) and Pyth Network (PYTH).
\"Infrastructure cross-chain projects have performed well this spring. Last year there was a boom in AI tokens, which have already reached major highs and are gradually being adjusted - this is Fetch.ai (FET), Worldcoin (WLD) and others. The DePIN sector performed well — many projects were shot well. I like Helium (HNT) and a few more coins, but I don't expect a lot of growth from them," he shared.
Cohen calls the main driver the RWA, which was repeatedly mentioned in his interviews by the head of BlackRock, Larry Fink.
"Some tokens have shown very high returns, in particular TokenFi from Floki Inu, although [the project] has nothing in fact. Hedera (HBAR) is also more of a HYPE, but it is already in use. Of the most promising projects, I will single out Chainlink (LINK), which has a working platform for RWA, it is used by corporate clients. This coin has not grown much yet, and I believe that it has great potential," the expert concluded.
Earlier, trader Gordon Grant pointed to a decrease in faith in the growth of bitcoin and Ethereum.
Read more about the post-mining dynamics of digital gold in the special material ForkLog.
https://forklog.com/news/pochemu-ne-rastem-eksperty-obyasnili-posthalvingovuyu-dinamiku