Why Bitcoin should be invested with caution now

Gennady Nikolaev, expert of the Academy of Managementfinances and investments, shared with BitCryptoNews his vision of the future prospects of the cryptocurrency market and the forecast of the nearest changes in the bitcoin exchange rate.

Waiting for the halving

According to the expert, at the moment there are noprerequisites for a significant increase in the value of Bitcoin. Since 2018, there has been a clear downward trend, the fundamental picture contributes to a further decline in the exchange rate to the level of the end of last year $7000-$7500.

For VTS, the first two weeks of 2020 were the most successful in history.last 8 years:quotes jumped by 25%, but soon after that the growth rate slowed down, and by the end of January, the main cryptocurrency gained about 34%. Prices for digital assets are highly correlated, so a similar picture was observed for other popular instruments: Ethereum (+39%), XRP (+25%), Bitcoin Cash (+85%), Litecoin (+73%). 

Any serious reasons for growthThere are no cryptocurrencies yet: institutional players cannot enter the market due to regulatory restrictions and the lack of necessary infrastructure, while the enthusiasm of private investors has weakened. There is no significant influx of new users: the number of active addresses has remained at an average level of 600 thousand for a year now, and the number of daily tweets mentioning Bitcoin is close to mid-2016 levels. 

Crucial moment?

So far, the only reason for shoppingis the upcoming halving of bitcoin, after which the reward of miners for each mined block will be reduced by half, to 6.25 BTC. This event will lead to a reduction in coin emissions and market supply, which in theory should have a positive effect on prices, but this does not always happen.

The halving took place in August last year.Litecoin: in anticipation of the changes, the coin rose to $144 thanks to active speculation on “Day X,” but immediately after it, the LTC rate quickly dropped to $38 and is now trading around $67. 

Most likely, bitcoin expects a similar fate inthe next three months. The rest of the cryptocurrencies will grow for the company, as is usually the case on the digital market: investors disperse the leader’s quotes, and then pay attention to cheaper coins, which, due to their initially low cost, have great potential in comparison with the MTC. Of course, the potential for the fall of such assets is also much higher than that of Bitcoin, so investing in them is as careful as possible.

In February, we should expect the BTC to fall to $8,500, after which a short-term increase in the rate before halving is possible to $10,000 – $11 000.

About the dates of other key events in the crypto industry 2020 you can here.

Bitcoin crisis

Gennady Nikolaev believes that there are reasons forThere is practically no investment in the main cryptocurrency now, despite the fact that it is the only one on the entire market that represents at least some interest and really has some potential.

This is due to the fact that since its inceptionBitcoin, Visa, Mastercard and other payment systems have significantly evolved, now offering their clients a very convenient and fast service. For today's realities, waiting for a BTS transaction to be confirmed is too long, and it is almost impossible to increase the processing speed. Many are counting on second-layer solutions such as the Lightning network, but so far they have not particularly influenced the interest of ordinary citizens.

Unfortunately, bitcoin, as a means of payment,Now they are used only to circumvent currency control and as a way to stand out. Nevertheless, it began to show itself as a means of saving value, especially in the context of the economic crisis and hyperinflation in some countries. It is still not known exactly what this will lead to, so a small amount can still be invested in bitcoin, but without forgetting about the potential risks.

The situation with altcoins

At this moment, it makes little sense to invest inThere is no Ethereum, since many companies use ETH to attract funding for their startups and, after successful crowdfunding, begin to sell off the internal currency to pay for developer services, rent and other costs. The remaining top currencies are less popular copies of Bitcoin or Ethereum and have increased volatility .

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