Can Bitcoin be viewed as a store of value after the price drop in cryptocurrencies?

Corrections? Falls? What’s wrong with cryptocurrencies? Can Bitcoin still be viewed as a store of value? Lukas Enzersdorfer-Konrad, COO of Bitpanda, shared an analysis with Cointelegraph in Spanish trying to answer these questions.

Last week will be remembered for a long time as the week everyone would like to forget. In just under 24 hours, around 300 billion euros disappeared from the total market capitalization for cryptocurrencies, and many of the most important tokens lost around 40% of their value. Cryptocurrency sales resumed over the weekend, with major currencies falling between 50% and 80% over the course of the week. Bitpanda’s COO pointed out.

to????Many factors contributed to such a severe setback from Elon Musk’s criticism of Bitcoin’s environmental impact to the risk of major restrictions on mining and its use. The news of the shutdown of mines in China and the taking of profits as a result of the huge profits of the past six months could also have contributed to the decline, “he later added.

Can Bitcoin be viewed as a store of value after the price drop in cryptocurrencies?
Can Bitcoin be viewed as a store of value after the price drop in cryptocurrencies?

For Lukas Enzersdorfer-Konrad, most of the volatility is due to overloaded and leveraged speculators who liquidated their profits and triggered cascading downturns that prolonged the panic selling.

“Bitcoin sales continued to shift to other tokens, mainly altcoins with lower market capitalization and liquidity, resulting in extremely high volatility,” he explained.

Can Bitcoin be viewed as a store of value?

Source: (trade view)

After falling 50% in such a short period of time, one wonders whether Bitcoin can be viewed as a “store of value”.

Gold, art, diamonds, wine, and collectibles have a value and use that goes beyond the deposit of value. Actual usage is important as it smooths out price volatility as real demand tends to offset fluctuations in investment demand. This means that it is unlikely that assets will go to zero, ”explained Enzersdorfer-Konrad.

Bitcoin, while benefiting from higher liquidity, is currently suffering from the few practices for everyday use. In addition, the high energy consumption makes Bitcoin susceptible to falling demand as a store of value compared to other better-designed cryptocurrencies. he said afterwards.

As a result According to Enzersdorfer-Konrad, BTC is losing dominance: It currently has a 40% share, the lowest since June 2018 and 72% less than at the start of the year. The lowest dominance on record was in January 2018 when Bitcoin ruled with only 35% of the market share. Bitcoin is trying to find its sweet spot in the market while competing with other altcoins. Perhaps it is too early to compete with gold for the demand for safe haven value for now, but it is certain that the two can coexist and it will be exciting to see what the future holds.

The ETH is gaining momentum

Enzersdorfer-Konrad also went into the price of ETH, saying that trading volume continues to increase due to its approach to BTC in terms of market capitalization.

“The total value of Ethereum is now around € 335,000 million while Bitcoin’s market capitalization is € 620,000 million,” he said.

This week, Ethereum saw an even bigger correction than Bitcoin, falling from € 3,600 to € 1,400, its lowest level since early April. At the time of this analysis, it is trading back above $ 2,300, which means it’s up 300% so far this year, ”he added.

(Source: trade view)

Altcoins go up

According to Bitpanda’s COO Most altcoins rebounded after last week’s correction. LINK had been one of the best performing altcoins of recent times and had regained more than half of its value. At the time of this analysis, more than 25 euros was being traded.

TO

(Source: trade view)

DOGE had fallen 70% from its all-time high to € 0.2, its lowest level since April. After a strong recovery, this analysis was trading at EUR 0.3. “Despite the decline, it remains one of the top performing cryptocurrency assets this year,” he said.

(Source: trade view)

Regarding the tokens with a smaller market capitalization and a lower trading volume, he made it clear that they were also experiencing extreme price corrections, which was also the case with IOTA.

The price fell more than 70% from its all-time high and found resistance at its February low of $ 0.75. That support proved strong, which resulted in buyers regaining control and pushing the price down again, ”explained Bitpanda’s COO.

(Source: trade view)

You might be interested in:

Similar Posts