A popular cryptocurrency analyst has recently suggested that the flagship cryptocurrency Bitcoin ($BTC) could currently be trading at a “generational bottom,” arguing that while the cryptocurrency’s price may still drop further from current levels, in the future the difference won’t be significant.
In a recently published video, crypto analyst Cred noted that it’s unclear whether Bitcoin’s bottom this cycle is around the $20,000 mark the cryptocurrency is currently trading at but pointed out that BTC’s price correction was influenced by a number of external factors that are unlikely to occur again in the near future.
Cred noted that the $20,000 mark isn’t necessarily the “best price” that will be available this cycle, but the analyst added that it doesn’t matter whether it is or not, and compared it to the 2018 cycle when BTC dropped from $6,000 to $3,000.
Per Cred, investors who bought BTC at $6,000 likely felt they made a mistake once the cryptocurrency’s price halved to $3,000 within a few weeks, but probably felt they made the right decision if they held onto their coins and saw them skyrocket to $69,000 by 2021.
The analyst added:
I think a similar analogy can be extended to kind of $20,000. It’s a coin toss whether it’s a generational bottom or not and where the market really ends up. But I think over a long enough time horizon if you’re right about crypto or if you care about crypto, you’re probably not going to regret buying $20,000
According to the analyst, whether investors are going to regret buying around the $20,000 depends on their “volatility and drawdown tolerance in the interim.” Cred defended the flagship cryptocurrency could be trading at a generational bottom by pointing to several factors affecting risk asset markets.
Cred pointed out that the U.S. Federal Reserve – along with most central banks throughout the world – are raising interest rates while trying to bring down rising inflation, at a time in which the U.S. dollar keeps gaining strength against other fiat currencies.
The analyst, as Daily Hodl reports, noted that these “incredibly unique conditions” are unlikely to repeat themselves in our generation, as before all of this happened the economy shut down over the OVID-19 pandemic, saying that this “sequence of events is on its own just so unfathomable that realistically speaking we may only get one in our lifetime. The analyst added:
The crypto corrections, yes, may and will happen more often. But in terms of this whole big macro liquidity basket correlated to trade, I think the number of times we’ll get to experience this in our lifetimes is very, very low.
He concluded that BTC at $20,000 presents an “opportunity” for investors who can “stomach some drawdown.” The analyst is looking for the $20,000 to stop acting as a resistance and move to support before cryptocurrency prices can move up.
Notably, there are other bullish factors out there. As CryptoGlobe reported, the amount of BTC being held on cryptocurrency trading platforms has dropped to a four-year low after nearly $700 million worth of the flagship cryptocurrency were withdrawn from trading platforms in a single day.
Featured image via Unsplash