It’s been a bad week for the crypto market. For investors, the big question is how low will crypto prices go?
After the prices of bitcoin, ethereum, and other cryptocurrencies saw big drops this week, several experts say it could get even worse amid a broader investor sell-off of risky assets. The price of bitcoin fell more than 30% over the last week to just under $21,000, and Ethereum followed a similar trend. The second-largest crypto dropped close to $1,000 Thursday.
The stock market rallied Wednesday afternoon after the Federal Reserve raised interest rates by 75 basis points, the largest increase since 1994. But the crypto market didn’t follow, which could be “a troubling sign for some investors,” according to Edward Moya, a senior market analyst at OANDA.
“Bitcoin was unable to muster up a rally despite a broad rally on Wall Street following the Federal Open Market Committee (FOMC) decision. If a big rally on Wall Street can’t excite crypto traders, bitcoin could be in trouble,” Moya says. “The $20,000 level is holding, but it looks like no one wants to jump back in on the crypto trade.”
Many experts are warning this may be the beginning of a “crypto winter,” an extended period when prices fall and remain low, such as they did between early 2018 and mid-2020. If bitcoin drops below $20,000, several experts predict it could go far lower.
Having fallen more than 30% over the last week, investors are wondering where the bottom may be for bitcoin as well as other digital assets.
How Low Will Bitcoin and Ethereum Go?
Bitcoin first slipped below $30,000 last week, declining steadily to $25,000 by Sunday before making a substantial fall to $21,000 on Monday. The largest crypto slid down further to $20,000 on Wednesday and continued to hover near that range Thursday. Ethereum reacted similarly, falling as much as 30% over the last week to a new 18-month low of $1,000.
As the two most well-known cryptocurrencies on the market continue to tumble, you may be wondering just how low bitcoin and ethereum could go and whether you should buy the dip. While it’s impossible to say with certainty, many crypto experts have a sense of where bitcoin and ethereum could bottom out based on technical charts and historical data. Here’s how low bitcoin and ethereum prices could go in the coming weeks or months, according to these three experts:
Point of view: Entrepreneur and author of “Cryptocurrency Investing for Dummies”
Bottom projection: Bitcoin could go as low as $11,000
Why: The crypto market is in the midst of a bearish sentiment cycle as investors are largely retreating from risky assets. Several factors are driving negative sentiment in the stock and crypto markets right now including inflation, a shaky stock market, rising interest rates, and recession fears. As a result, bitcoin has dropped by nearly 70% from its all-time high of $68,000, breaking below several key technical levels over the last few weeks. Crypto prices could continue to tumble if the shaky macroenvironment doesn’t improve in the near term.
Point of view: Crypto expert and educator
Bottom projection: Ethereum could fall to $750
Why: The price of Ethereum now is almost equal to its price at the start of 2021. Generally, in bear markets, ethereum and bitcoin can drop up to 85%, says O. Ethereum hit an all-time high in November 2021 at roughly $4,800, so an 85% correction would lead to around $750. However, it’s not going to be a straight shot down. According to O’s technical analysis, there are several resistance levels at $1,700 and $1,885, so we’ll likely see a volatile reversal upward before ethereum completely bottoms out.
Point of view: Venture capitalist and founder of Delta Blockchain Fund
Bottom projection: Bitcoin could drop to $14,000, and ethereum could fall to $500
Why: Crypto winter is here, and we’re unlikely to see a meaningful rally for the next 12 to 18 months. Fears of a recession are pushing investors to liquidate risky assets, and the collapse of Luna and TerraUSD last month and lender Celsius pausing withdrawals this week have further eroded confidence in the space. If the broader market sell-off deepens, Gupta expects there will be more collapses in the crypto space. That, in turn, could further erode investor confidence in the crypto market and prices could fall even lower.
This Week’s Crypto Crash: Should You Buy The Dip?
There’s never a “perfect” time to start investing as it’s impossible to time the market. But experts say now could be a good time to get in the market while prices are low — after you’ve assessed your risk tolerance (crypto is highly speculative) and covered other financial priorities, like saving for an emergency and investing in a more traditional retirement fund. Potential investors looking to buy into this week’s dip should understand that fluctuations are par for the course, and be prepared for this kind of volatility going forward.
Even if you invest now, with prices relatively low, be prepared for them to fall even more. That’s why it’s important to only put in what you’re comfortable with losing. Experts generally recommend allocating less than 5% of your portfolio to crypto investments.
If you’re planning to buy the dip, you may be wondering which cryptocurrencies to invest in. Though the potential growth of ethereum and bitcoin are highly speculative, they are still among the best cryptos you can invest in right now, according to NextAdvisor’s Investability Score and experts we’ve spoken to over the last year. Bitcoin and ethereum are the two largest cryptocurrencies by market cap and exchange volume, making them good options if you are just starting a crypto investment journey.
Bitcoin has the highest score of all cryptocurrencies, with ethereum right behind. Here’s how our score shakes out for 10 cryptocurrencies that are consistently among the top by market cap, excluding stablecoins, for reference: