Cryptocurrency market analysts froze in confusion. No one has a logical explanation for the stagnation in the market. Bitcoin forecasts vary from 900% up to 50% down.
A steady decline in the first cryptocurrency may mean that bitcoin was overvalued at its peak, investment company Invesco states. According to the company’s experts, a bubble was inflating on the market throughout 2021, which is now deflating.
Invesco’s disappointing forecast: the decline will continue for up to two years. Usually, bubbles in the markets deflate in two years. As a result, the price of BTC will drop below $30K. Previously, Invesco has already made a pessimistic forecast for cryptocurrencies, but it was wrong. Now the company’s experts claim that they were mistaken only in the timing of the market drop, but not in the BTC price decline.
Another version of the leading cryptocurrencies decline is the NFT bubble inflating. The NFT market is growing at a cosmic pace, by hundreds of percent a year. For example, the turnover of the most popular marketplace OpenSea in 2020 amounted to $33 million, in 2021 $13 billion, and in the 19 days of January 2022 – already $3.5 billion.
According to experts, OpenSea accounts for 88% of NFT turnover. Perhaps there is a bubble in this market, and the NFT technology itself is overvalued. Experts admit that in this case, bitcoin can really drop by more than 2 times from the historical maximum, that is, to $30K, but only for a short term. It is highly likely that at this level the whales will buy BTC, and it will return to growth again.
The NFT hype also has a negative effect on the price of Ethereum. JP Morgan analysts note that the share of ETH in NFT trading has decreased from 95% to 80% over the year. NFT applications are shifting to other platforms because of the Ethereum network overloading and high fees. One of Ethereum’s strongest competitors is Solana (SOL). As a result, SOL grew almost 46 times over the year, from $3.0 to $137. At its peak in early November 2021, the price of SOL was almost $259. Ethereum has grown only 2.8 times over the year, from $1122 to $3145.
There is also a compromise option for the development of the situation. Bitcoin can balance in the $30K – $60K range for a long time. A signal for growth may be the revival of the stock market. Currently, many analysts note an almost complete correlation between the cryptocurrency and fiat markets.
The optimistic scenario is that the market is accumulating energy for a breakthrough. The fundamental reason for the growth is the massive adoption of cryptocurrencies, which is taking place against the backdrop of rising inflation in the US.
The depreciation of the dollar encourages investors to choose cryptocurrencies to save their wealth. This point of view is shared by Harry Yeh, the founder of the American consulting company Quantum Fintech Group. According to the expert, inflation in the United States cannot be cut in a short time, so the growth of cryptocurrencies is inevitable. Harry Ye Forecast: BTC price around $400K by the end of the year.