During the summer of 2017, ETH price corrected 67.8% from $420 to $135 to surge to $1,420 ATH a few months later. As such, investors remain hopeful with EIP-1559 and The Merging coming while OTC desks report their biggest outflows.
The price of Bitcoin made an all-time high at nearly $65,000, which followed a correction to $47k.
But in the first 10 days of May, Bitcoin price had moved back to almost $60k, and it was after this bounce that the market simply started winding down. The price went down to $30k on Coinbase and even lower on other cryptocurrency exchanges, representing a 54% drawdown.
Now, we are ranging between $33,500 and $42,500.
While this may incite fear-like sentiments into some with the market looking extremely fragile, not everyone feels the same.
Mike Alfred, Head of Strategy at NYDIG, is still looking at $100k in the fall.
When it comes to Ether, it plunged 55% to $1,900, which according to long-term Eth investor Tetranode, is “just a season correction to shake out the overleveraged tourists.”
He pointed to the summer of 2017 when ETH price corrected 67.8% from $420 to $135 only to surge to $1,420 ATH a few months later. This time, according to him, EIP-1559 will send ETH prices higher, followed by The Merging, which will push it to “$10,000 minimum,” he said.
Textbook shakeout and hammer. Absolutely beautiful to behold. See you at ATHs in a few months.
— Mike Alfred (@mikealfred) May 19, 2021
According to Chainalysis data, investors spent about $410 billion buying up Bitcoin during this bull market. During the crash, professional investors bought at cheap levels, helping put a floor.
The volatility has noobs, and traditional finance people are hooked on cryptocurrencies, and they are buying the dips.
“We had kept dry powder,” said Felix Dian, former Morgan Stanley trader who is running an $80 million crypto-focused fund at MVPQ Capital, who bought the BTC dip at around $35k.
Charles Erith of ByteTree Asset Management was also among the buyers who told Bloomberg, “It’s obviously not regulated, and it’s a very young asset, but I don’t think this is going to be a revisit of 2018.”
Jill Carlson, principal of Slow Ventures and co-founder of the Open Money Initiative, believes that companies are still considering using this as a balance sheet asset.
While there is some confusion, “the reality is institutions are still buying bitcoin. If you look at the data from yesterday, OTC desks had their biggest outflow, meaning institutions buying, that they’ve seen in three or four months. And that to me indicates that institutions are still coming in and buying the debt,” Carlson said in an interview with Bloomberg.
Some hopium for you folks pic.twitter.com/ietcc0sG7a
— 1053r (@LongShortFundin) May 22, 2021
“People that were borrowing money to invest, they were wiped from the system,” Kyle Davies, co-founder at Three Arrows Capital in Singapore, told Bloomberg. His firm bought more BTC and ETH during this sell-off.
“Every time we see massive liquidation is a chance to buy,” he added. “I wouldn’t be surprised if Bitcoin and Ethereum retrace the entire drop in a week.”
While some retail traders have capitulated from the market, as seen in the $8.60 billion worth liquidations (incomplete figures as it doesn’t include Binance’s numbers fully), they also took the chance to scoop off cheap coins.
One such retailer, Brjánn Bettencourt, a photographer who sees crypto as a “serious long-term investment,” told Reuters, “Investing in crypto is not for the faint of heart.”
These ups and downs of crypto are actually part of crypto’s appeal. Investing in cryptos “feels like that scary rollercoaster,” he had said. “You’re riding it up and riding it down and feeling every twist and turn, which to me is exciting and fun.”