Bitcoin drop sparks debate among financial experts and investors

Nigel Green, the CEO and founder of DeVere Group, predicts that Bitcoin will recover from the current crypto crash to hit a fresh all-time high of $75,000 by the end of 2022. Financial experts disagree to some extent.

The  prediction by Green  comes as the world’s largest digital currency by market capitalisation fell below the $40,000 level several times on Monday, weighing down the wider cryptocurrency sector.

The drop comes even as investors continue to grapple with surging inflation, geopolitical crises, and concern over tighter monetary policy by the Federal Reserve. The latest inflation report shows that consumer prices rose 8.5% in the year through March in the US. That’s the fastest inflation rate since 1981.

The total cryptocurrency market is currently $1.89 trillion, down 11% compared to the week before.

Green reads fear in investors due to the fall and that central banks might fail to achieve their goals as a result.

“It seems investors are reducing their exposure to risk-on assets, including stocks and crypto, due to heightening concerns about inflation and slower economic growth,” he said.

However, Kiana Danial, founder of Invest Diva, has measured optimism.

“Bitcoin could find medium-term support at around $37,000 and $31,000,” Danial said in a TikTok, while  analysing Bitcoin’s recent drop.

He further observed that the  central banks-  the U.S’ Federal Reserve, the Bank of England and European Central Bank among others might fail to prevent  inflation without expediting a recession.”

He continues: “At the moment, Bitcoin is being regarded as a risk asset, alongside equities.  But this might all change again as its primary characteristics remain the same.

The rise of inflation is only likely to bolster the price of Bitcoin, as investors will seem to protect their purchasing power by migrating into store value investments, from cash.

Thanks to its scarcity, accessibility and durability, Bitcoin is regarded as a credible hedge against inflation. Thus, it continues to attract demand by and by. 

For these reasons, Nigel Green remains extremely confident on Bitcoin. 

Consequently, he notes, that whales, who are individuals or entities that hold enough cryptocurrency to have the potential to move currency valuations, will be shrugging off concerns about dips, using them as buying opportunities, and focus on long-term trends.

Investing experts and financial advisors  warn against sinking too much of one’s portfolio into the crypto currency business. 

Nate Nieri, a financial expert  with Modern Money Management in San Diego, California warns against gambling with too much money when the business is volatile as it is now.

“You have a high chance of losing it all, but a small chance of winning it big, ” he said.

“Don’t gamble an amount that would burden your family or prevent you from achieving your goals.”

Bitcoin has not risen   above $50,000 since Christmas Day last year. However, even though it started  2021 in the low $30,000 range, Bitcoin improved throughout the year and hit its current all-time high when it went over $68,000 on November 10th.