The Bitcoin price plunges under the $40.000 mark as of writing of this text and is ranging 7.3% lower than yesterday. The important mark has broken and now everyone is excited, how it will go on with Bitcoin and Crypto in general. Are we entering a longer bear market now?
If the next “crypto winter” were to occur, it would drastically follow Bitcoin's current price action. A crypto winter is a period in which prices slide and do not rise for a longer period of time. The last so-called crypto winter occurred in late 2017 and early 2018, when Bitcoin crashed from around $20,000 to below $4,000 more than a year later, causing many investors to lose interest in digital assets.
But also here, many analysts are saying, that the actual price action is not normal, and it´s coming from the actual inflation and stock-market problems. But beside of it, analysts are saying also, that there are several more reasons, that Bitcoin could go even lower. One of these is the Federal Reserve's plan to raise interest rates at least threefold in 2022. This is intended to counteract imminent inflation. Rising interest rates would in turn destroy Bitcoin's reputation as a profitable store of value and alternative payment method. Another reason for the downturn is the emerging awareness of many investors that Bitcoin is not, as often claimed, “better money”. The cryptocurrency is volatile and inflexible due to the limited supply.
Ok, we are hearing this kind of FUD almost through the whole year, so normally it´s nothing unusual.
During the last so-called crypto winter to date, which began at the start of 2018, the bitcoin price slipped from around $20,000 to below $4,000. It did not return to the level of 20,000 dollars until almost three years later. Plan B, an analyst known for his stock-to-flow model, also sees a crypto winter with corrections of up to 80 percent – but only after the bitcoin price has entered six-figure spheres.
Stay tuned for more updates!