Bitcoin price back to 2020 levels

The crypto winter drags on and on and bitcoin is either preparing itself for a further drop, or it is building a platform from which to start climbing higher.

Things to get grimmer?

In what has now become the longest crypto bear market, albeit in bitcoin’s brief 14-year history, the question is: How much longer can it last?

If we look at the economic environment, things look grim, and it could very likely be argued that things are going to get a huge amount grimmer, as the Federal Reserve continues on its path of rate increases, and economies around the world are beginning to scream.

The rate hikes are sucking liquidity out of the markets and it’s becoming increasingly difficult for investors to know where they can put their wealth where it’s not going to decrease in a dramatic fashion.

Crypto is high risk

Given that crypto is considered by the market a high risk asset, many investors have already been shaken out and have sold at a loss. Those thinking to buy a dip have had to think again, and again, as prices continue to remain depressed.

The total crypto market cap is sat on the support provided by the 2017/18 bull market top at around $760 billion. A bad drop from here could take the entire market down to nearly half this value at $400 billion.

Bitcoin the relative safe harbour

Bitcoin is as always the only relatively safe crypto asset in this environment. Even ethereum is breaking down against bitcoin and this is leading to bitcoin making higher highs in the dominance chart.

Many accusations are levelled at cryptocurrencies in general, particularly at their perceived intrinsic value, and for many cryptocurrencies, this is probably true, at least up to now.

However, for those looking to take their wealth out of what could become a terrifyingly unstable fiat financial system, bitcoin might not be such a bad bet.

Many of those wishing to sell, or having to sell, would probably have done so by now, and those investors that are left are holding on tight, waiting for that moment when it dawns on the market that a digital asset outside of the monetary system that can’t be controlled by governments, might be a very attractive place to be.

The downside for bitcoin has to be reasonably limited. A price under $10,000 isn’t out of the question, but that isn’t such a huge drop from here. The upside though could possibly be far in excess of this, as it becomes realised that code and smart contracts are vastly superior to human economic decisions.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Source: https://cryptodaily.co.uk/2022/12/bitcoin-price-back-to-2020-levels