The price of lagship digital asset, Bitcoin hit $25,000 on Sunday morning, a figure last seen in early June, but is now trading at $24,043. Ethereum, the second largest cryptocurrency, jumped over $2,000 too and is now trading at $1,899, according to data from Coinmarketcap at press time.
In these last few days, the crypto market outlook has been positive as many holders expect prices to rally after the Merge activation by the Ethereum Mainnet. Holders of the two leading cryptocurrencies who were lucky to ‘buy the-dip’ in mid-June 2022 are now up around 40% and 100%, respectively.
But, we think that there is a reason you should be cautious with investing in Bitcoin and other major cryptocurrencies so you will not be caught in a dead cat bounce.
What do we mean?
Peter Schiff says bitcoin is heading to $10,000
The renowned American stockbroker and financial commentator, Peter Schiff has called on crypto holders to dump their BTC holdings before it’s too late.
Speaking to Kitco News, he predicted that Bitcoin will still go below $10,000 or worse, stating that it would never recalim its all-time high price.
“I think Bitcoin topped out at $69,000…the next big move for Bitcoin is gonna be low $10,000, People paid $ 50,000- $60,000 dollars for Bitcoin but they now have big losses of $23,000-$ 24,000 dollars,”
Schiff further claimed that Bitcoin has margin calls yet to be made. Once they are made, investors will be prompted to sell, pushing prices lower, leaving devoted investors holding their bags and institutions that got fooled into buying Bitcoin in regret.
“People are going to throw in the towel, and the market is going to plunge…I think people should take advantage of the sucker rally they have got right now and get out. I mean a lot of people still have profits.”
Commenting on 2021 when the crypto space was awash with enormous hype flowing from numerous adverts on mainstream media, celebrities signing on to promote various coins, the NFT craze, promotional conferences and El Salvador adopting Bitcoin as legal tender. Schiff said it was just a massive pump with people overlooking the dump.
“Who then was behind the ‘pump and dump scheme? …The people who were doing the hyping were the ones doing the selling,”
Crypto fear and greed index back to neutral
According to the estimation of Alternative, for the first time since April 6, 2022, the cryptocurrency “Fear & Greed” index is at 45/100. The Fear & Greed Index is a way to gauge stock market movements and whether stocks are fairly priced. The theory is based on the logic that excessive fear tends to drive down share prices, and too much greed tends to have the opposite effect.
The Fear & Greed Index is a compilation of seven different indicators that measure some aspects of stock market behaviour. They are market momentum, stock price strength, stock price breadth, put and call options, junk bond demand, market volatility, and safe haven demand.
The index gives each indicator equal weighting in calculating a score from 0 to 100, with 100 representing maximum greediness and 0 signalling maximum fear. While this is still below 50/100, analysts are treating this metric as ‘Neutral’.
Recall that earlier in June, the index plummeted to 6/100, which indicated a level of fear unseen in many years.
And just one week ago, the index was at 30/100. But the current level of Bitcoin sentiment indicates that it has managed to shrug off the losses caused by the Terra collapse three months ago and the dramatic decline that followed.
Bottomline
The crypto market has mostly been in the green zone for a few days and some experts have predicted that it’s heading towards $30,000 and above.
However, this euphoria might be dangerous like Peter Schiff warned. Also, the current bitcoin fear and greed indicator only says the market has overcome its May/June travails, not that it is set for a rally.
It is not clear if this price will take off and head to reclaim $30,000 because it is clear that the current spike is a mere hype spurred by the Ethereum’s Merge scheduled to go live next month.
On the strength of the foregoing, it is important to sit back and see how the market plays out, rather than rushing in to invest.
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