Bitcoin and Ethereum prices are as high as they’ve been since June’s crypto crash, but experts still urge caution for investors
Things are looking up for cryptocurrencies, at least for now.
Bitcoin, the largest crypto, hit $24,000 on Friday – hitting a new high in July as it continues to follow the rising stock market. Ethereum, the second largest crypto, climbed above $1,700 and other cryptocurrencies also traded higher on Friday.
The two biggest cryptocurrencies are on track for their best month of the year. Bitcoin is up more than 20% in July and ethereum is up 50%, according to NextAdvisor’s crypto price data.
But after a dismal first half, is the crypto market ready for a second half bull run? Experts aren’t saying quite, warning investors to be cautious. The market could easily crash again given the current macro environment, so it may not be wise to take risky bets right now.
“Many are warning that we are not yet out of the woods from a macro perspective,” said Adrian Kenny, a senior sales trader at digital asset broker GlobalBlock. “A cautious thesis is a more logical position to take in today’s conditions.”
Bitcoin and Ethereum Prices: Starting a Bull Run?
A lot happened this week that led to a rally in the crypto market and broader markets in general.
Many major retail and technology companies — including Google, Apple and Meta — disclosed second-quarter earnings, a factor that affects share prices. The Federal Reserve raised interest rates by 75 basis points, but signaled that it may slow the pace of such increases. And an economic report revealed that US GDP fell for the second consecutive quarter. Although it follows a commonly understood technical definition of a recession, President Joe Biden and Fed Chairman Jerome Powell both said this week that the US is not in a recession.
Experts say all eyes have recently been on how the Fed would respond to the threat of soaring inflation and a potential recession. Experts say the upward movement in the markets suggests that investors were already anticipating these results this week and are likely to continue moving higher in the near term because investors have already priced in the bad news.
“The reaction has been very positive this week, and the cryptocurrency markets once again tipped above the $1 trillion market cap again,” says Kenny.
Although this week has seen some market recovery for the first time in over a month, there is still “undoubtedly a significant mountain to climb in terms of ‘normalcy’ or hope for a return to 2021 highs anytime soon,” says Kenny.
What this week’s crypto rally means for investors
If you’re investing in crypto for the long term, the latest developments this week shouldn’t drastically change your investment strategy. It is simply a reminder that crypto assets are highly volatile and risky, especially in times of economic uncertainty.
Although there has been positive momentum in the crypto market this week, bitcoin and ethereum are still down more than 50% from their all-time highs last November. Given crypto’s history of volatility, prices will continue to fluctuate drastically up and down – and it is extremely difficult to predict with certainty where they will go next.
One thing’s for sure: it’s a grim list of long-term potential concerns for the U.S. economy, so experts recommend playing it safe. Do not allocate more than 5% of crypto to your investment portfolio and only put in what you are comfortable losing. Before putting extra money into the crypto market, always make sure your financial bases are covered – from your retirement accounts to emergency savings.
