Cryptocurrencies are still rejected by much of the market. Mega-investor Warren Buffett said at the Berkshire Hathaway shareholder meeting in May of this year that he wouldn’t buy all the world’s bitcoin even if he only had to pay $25. months after reaching its all-time highs. Bitcoin, which already cost US$ 68,900 in November 2021, was quoted at US$ 23,200 on Monday (1), down 66.3% since the peak. The same happened with ethereum, which peaked at $4,800 in November 2021, but on Monday was worth $1,600, down 66.6%.
Is this conservative wing right? For most analysts, no. According to many market professionals, there is still light at the end of the tunnel for these assets. The general fall in prices was due to the monetary tightening carried out by the main central banks in the world, especially the Federal Reserve (Fed), the American central bank. “Rising interest rates cause a flight of capital from risky assets,” said Acquavero cryptocurrency analyst Guilherme Bento.
Therefore, there is an expectation of an improvement in prices, both in the short and in the long term. For shorter time gains, experts recommend ethereum as a good option. The reason is the new transition date for ethereum 2.0, announced on Thursday (28). Top Gain cryptocurrency expert Raquel Vieira stated that “the update, also known as The Merge, has been confirmed for September and until then the cryptocurrency will have new highs.”
“There is a possibility that the market value of ethereum will surpass that of bitcoin over the years because of The Merge” Guilherme Bento cryptocurrency specialist at Acquavero.
The Merge is a technological update where proof of work will be replaced by proof of stake. Instead of the current method, where it takes energy to make a computer solve a complex algorithm to validate transactions and then ‘mine’ (be paid for) cryptocurrencies, as in proof-of-stake, the new method will validate transactions by ‘ participation’. The ‘validators’ will register coins (stakes) that will certify the transactions, and they will be remunerated for doing so.
Complicated? Simply put, after this technological upgrade, transactions based on the blockchain that underpins ethereum will be safer, faster, cheaper and more sustainable, because energy consumption will be much lower. And the energy expenditure to carry out validations and mine bitcoins is one of the main criticisms of the ‘traditional’ economy to this market.
According to analysts, the rallies will take place in the face of expectations about the new improvement in the cryptocurrency. However, they warn that after The Merge is complete, the trend for ethereum will not be so good. “It is possible that prices will continue to be pressured and suffer further devaluations if the macro scenario does not improve,” said crypto asset managers at Órama Singular, Guilherme Pimenta and Felipe Prado. In this way, analysts make it clear that until September, ethereum will continue to rise, but after that, the cryptocurrency should experience strong profit taking. Which for experts is something to be expected from the market.
LONG TERM Bento and Raquel, on the other hand, did not rule out the possibility that the cryptocurrency could present good profits in the long term. “There is a possibility that ethereum will pass bitcoin at market value over the years because of The Merge,” said Bento. However, experts recommend prudence to the investor. “The market will have a lot of volatility until the middle of 2023,” said the cryptocurrency analyst at Acquavero.
The reason is the cycle of interest rate hikes, which even with a milder tone announced by the Fed last week should continue to weigh on the crypto world. Therefore, the recommendation is to buy gradually to form a lower average price. “It is possible to buy a fraction of the cryptocurrency for up to R$50. This is the best way to guarantee good profits”, said Raquel. Bento said that anyone who buys bitcoin today and withstands the volatility of the coming months “should reap good results in the next two or three years”.
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