Have Bitcoin and Ethereum Prices Bottomed Out? What the experts say

After a turbulent year, the prices of bitcoin and ethereum are looking up. But some experts aren’t quite ready to say that investors are clear about the latest price swings.

The two largest cryptocurrencies are still down more than 50% from their all-time highs late last year. Still, in typical fashion, the crypto market rebounded significantly in July, with the price of bitcoin up more than 30% and ethereum up 70% since the market meltdown in June. Could it signal to investors that bitcoin and ethereum have already passed the lowest price points of this cycle?

As of Wednesday, bitcoin held close to $24,000 and ethereum climbed above $1,800, following the release of the new inflation data. Inflation eased slightly from historically high levels in July, which in turn led to a rally in the stock and crypto markets. Ethereum’s price increased by 8% and bitcoin’s price increased by almost 4% in the last 24 hours.

But some experts remain skeptical about what recent price jumps could mean in the long term.

“The Fed is still tightening and inflation is still high, so we can’t be convinced of a reversal in the market at the moment,” said Marcus Sotiriou, market analyst at digital asset broker GlobalBlock. “But the fact that [Fed Chairman] Jerome Powell has started to say that the rate hikes have had a noticeable effect signals to me that we are in the later stages of this bear market, which we are about eight months into.”

Have Bitcoin and Ethereum Prices Hit Bottom?

Bitcoin and Ethereum have been gaining positive momentum for a few weeks now. While the rise in bitcoin and ethereum’s prices has been impressive, crypto’s ties to the stock market could be a sign of future volatility.

The stock market had its best performance since 2020 in July and continues to rally in August, so you could argue that crypto is currently benefiting from the rally in stocks, said Scott Sheridan, CEO of brokerage Tastyworks. By the same token, if stocks weaken again, crypto is likely to follow suit.

“I think if you start to see the market give up some of the recent gains, you’ll probably see something similar in crypto,” Sheridan says.

Crypto educator and market analyst Wendy O is also not convinced that bitcoin and ethereum have reached their lowest prices in this cycle yet. O says the market will see “real capitulation later in the bear market,” which she believes will last another one to two years. Capitulation is the moment when investors lose all confidence in the outlook for prices, even after they have fallen. These images show what capitulation could look like for bitcoin and ethereum over the next year, according to O.

While crypto prices are impossible to predict with certainty, O says signs point to bitcoin and ethereum falling back above their June lows of $17,500 and $900. And continued economic and political uncertainty could create even more volatility in the market in the coming weeks or months.

“In previous bear cycles, both cryptos have corrected 85%,” says O. “I expect bitcoin to reach $10,000 and ethereum to $750.”

What crypto investors should do amid continued volatility

The only thing guaranteed when it comes to crypto investing is volatility. Almost a year ago, bitcoin’s price fluctuated as high as $68,000, and now it is back below $25,000.

These ongoing fluctuations are a good reminder that not everyone has a risk tolerance for crypto. If you are curious about crypto, remember that investing in crypto is extremely risky and you should allocate only 5% of your investment portfolio to crypto assets. Even then, only do it if you have a high risk tolerance. There is no guarantee that you will make money – or even get back the money you put into the crypto market.

Invest only what you’d be okay with losing, and only after your other financial priorities are in order — like saving for an emergency, paying off high-interest debt, and contributing to a traditional retirement plan.

Bitcoin and Ethereum’s fluctuations so far this year show the extreme volatility crypto investors face. If you are interested in investing in crypto, or you have already put some money into bitcoin, experts advise not to panic about short-term fluctuations and rather focus on the long-term growth potential.