Bitcoin is down nearly 55% from its peak, and 40% of holders are now underwater with their Bitcoin portfolios, according to new data from Glassnode. In the past month alone, as Bitcoin sank to $31,000, about 15% of all Bitcoin wallets suffered unrealized losses. Things are especially bad for the short-term holders who bought into Bitcoin during its last major spike when the prices soared past $67,000. Damn you FOMO!
What Happened To Bitcoin’s Promise Of Being An Inflation Hedge?
For many, Bitcoin’s recent underperformance is a massive disappointment. Part of the promise, and the reason that Bitcoin was even invented, was to be an inflation hedge. Bitcoin was created in the wake of the 2008 recession as a way to invest money that wouldn’t be impacted by recession, inflation and other traditional economic issues.
But now the price of Bitcoin just follows the trends of everything else. In this case, Bitcoin lost its value as the cryptocurrency began tracking the decline of tech stocks and the NASDAQ. This may mean cryptocurrencies are no longer inflation hedge investments and instead will just closely correlate with other markets. It’s sad.
Even worse, the rate of the recent sell-off shows that Bitcoin investors were willing to pay higher fees to dump their cryptocurrency as quickly as possible. In total, about $3.15 billion moved through the various cryptocurrency exchanges in mostly panicked transactions.
Bitcoin Investors Wonder How Low The Price Of Bitcoin Will Go?
Many on Wall Street don’t think the market has hit its bottom yet. So, if current trends hold true, Bitcoin still has some gains to give up.
Financial advisory firm, Fundstrat Global Advisors, thinks the price of Bitcoin will bottom out at around $29,000. So, is Bitcoin a good investment at that price? If that is indeed the bottom, then it might be time to get back in… that is, if you still have faith in Bitcoin.