The Bitcoin (CRYTPO: BTC) price remains under pressure, with the world's biggest crypto sliding 6.1% over the past 24 hours.
One Bitcoin is currently worth US$44,858 (AU$57,510). The slide has seen Bitcoin's market cap fall from more than US$1.1 trillion in mid-April to US$845 billion today, according to data from CoinDesk.
Let's keep this in perspective though.
While the Bitcoin price is now down 31% from its all-time high of US$64,829 on 14 April, it's still up 59% in 2021. And if you'd bought Bitcoin at this time last year, you'd be still be sitting on a gain of 363%.
But that's all in the rearview now. The question investors are pondering today is, what's next?
Should you invest 3% of your portfolio in Bitcoin?
Whenever the price of an asset slides more than 30% over a period of weeks, investors are prone to hit the sell button. But as with shares, panic selling crypto assets may not be in investors' best interests.
Anthony Scaramucci, founder of SkyBridge Capital, remains decidedly bullish on his outlook for Bitcoin. (You may also remember Scaramucci from his 10-day role as former US President Donald Trump's communications director.)
According to Scaramucci (quoted by Bloomberg):
As an investment adviser and someone who's been running money for 30-plus years, it's responsible of me to tell my clients to own 1%, 2% or 3% [in Bitcoin]… I'm not telling them you've got to own 100% of your net worth in it – but if we're right, you don't want to be missing out on this.
Scaramucci pointed out that despite the growth in altcoins, Bitcoin has maintained "its supremacy as the apex predator in digital currency".
Joining Scaramucci's bullish outlook is Twitter Inc. and Square Inc. CEO Jack Dorsey. Dorsey tweeted, "Bitcoin changes *everything*… for the better. And we will forever work to make bitcoin better."
Square's CFO, Amrita Ahuja had earlier tweeted:
Our bitcoin strategy hasn't changed. We're deeply committed to this community, including working towards a greener future through our Bitcoin Clean Energy Initiative. And as we shared in February, we continue to assess our bitcoin investment on an ongoing basis. Nothing new here.
Buy-the-dip forecasts for sold off cryptos
Rather than expecting a longer-term continued slide for Bitcoin, Simon Peters, crypto analyst at multi-asset investment platform eToro, believes bargain hunting crypto investors are likely to return in the next few weeks.
According to Peters:
The sell-off is being driven by a number of factors; valuations were at or near all-time highs… so there will naturally be some profit-taking, while we are also seeing a general sell-off among risk assets – such as technology stocks – as economies start to unlock post the pandemic and investors fret over potential rate rises and higher inflation.
However, for many cryptoassets such as bitcoin and ethereum, the long-term story has not changed. This emerging asset class continues to revolutionise many aspects of financial services, and while nothing goes up in a straight line, the long-term fundamentals for cryptoassets remain as solid as ever.
Taking technical analysis aboard, Peters said, "Importantly, we continue to see higher lows, as well as higher highs, for cryptoassets as more investors enter this asset class, and we do not expect that trend to change."
In share markets, a trend of higher highs and higher lows is considered a very bullish signal. Those same trends are also closely watched in the world of cryptocurrencies.
As far as the falling Bitcoin price goes, Peters adds, "We would expect to see buyers return to bitcoin, ethereum and peers in the next few weeks to take advantage of lower prices."
If you are tempted to go bargain hunting among the beaten-down cryptos, bear in mind their historically notorious volatility. If you can stomach that level of price swings, best of luck buying the dip!
