The recent rally in crypto prices has sparked some debate among analysts and investors between cryptocurrencies bounce from lows gains ahead. But a common explanation is that there is an underlying ‘risk of missing out’ effect. Fear Of Missing Out is a popular psychological factor that can cause investors to buy into dips. As such, cryptocurrencies are ripe for a rebound. As long as they’re able to break out of their recent bear market.
This is especially true for bitcoin, as its value has fallen more than 50% since its high in late November. The fall in price is due in part to the failure of the terra. Cryptocurrency project which is value at $50bn. Traders have been taking advantage of the uncertainty by selling their holdings prematurely. They’re speculating that the cryptocurrency will bounce from its lows and rebound to the pre-dip levels.
Cryptocurrencies Bounce
While a few crypto experts have recommended accumulating large amounts of crypto, investors should be wary of sinking too much of their portfolios into a volatile market. Financial advisers suggest that clients avoid putting their entire savings into crypto until they’ve seen better performance. Additionally, a volatile market may interfere with other financial priorities. According to Nate Nieri, a CFP with Modern Money Management in San Diego, investors should only invest with money they can afford to lose.
Bitcoin has been down nearly 50% since its high in November, and has not topped $50,000 in two years. While the price is volatile and prone to extremes, it has remained above $20,000 for the past week. However, the lagging recovery of the job market and wider economic conditions have been unfavorable for this asset. The price of Bitcoin remains below its high of $58,000, but it has bounced over 30% to reach the mid-$1,100s on Monday. However, the recent price volatility should only be a short-term phenomenon, as the currency has already recovered a significant portion of its value in less than a week.
Although the current market is still highly volatile, the underlying technology behind cryptocurrencies is remarkably resilient. The underlying technology of cryptocurrencies is global, and the corresponding regulations are not yet fully in place. The newest innovations in this technology often come with risks. The theft of cryptocurrency wallets is on the rise, and fraud continues to cast a dark cloud over the industry. It is this tension between risk and promise that makes this world so unlike anything we’ve seen before.
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Dogecoin is an example of a cryptocurrency that may rebound from its lows. It was launched in 2013 and subsequently appreciated over 300%, hitting a high of $0.0170 in early 2018. It also reached a market cap of $2bn, which was its highest in history. These gains may seem like a long shot, but they’re still a sliver of a pie compared to other major cryptos.
