Bitcoin prices have taken a beating lately, falling sharply over the last several months and dropping more than 15% in the space of 48 hours.
After suffering these declines, the digital currency is trading close to $6,450, according to the CoinDesk Bitcoin Price Index (BPI).
At this point, bitcoin is down more than 66% from its peak of roughly $19,800 reached in December 2017, additional BPI figures show.
[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Now, it is time for the million-dollar question.
Since bitcoin prices have fallen so much lately, is now a good time to buy?
When polled, analysts offered measured responses, emphasizing that there are both bull and bear cases for the digital currency.
Bitcoin’s Intense Volatility
Some stressed bitcoin’s volatile nature, noting how difficult it is to forecast what its price will do.
The digital currency goes through “very distinct boom and bust cycles where it’s quite normal to see massive surges and sizable retracements,” noted Mati Greenspan, senior market analyst for social trading platform eToro.
Because of this, “It’s obviously hard to predict short-term price moves, especially in this crazy sector,” emphasized Jacob Eliosoff, a cryptocurrency fund manager.
“People should be suspicious of those who do,” he added.
The Bear Case
First off, this article will consider the bear case.
Even after suffering a large retracement, bitcoin’s price “still carries the possibility of moving even lower,” noted Greenspan.
“I see no reason Bitcoin’s price couldn’t keep dropping or stagnating for another year or two,” stated Eliosoff, noting that “it did from Dec 2013 to mid 2016.”
However, he stated that “the present bear market feels more like a natural reaction to 2017’s bull market than a reflection of any fundamental problems.”
The Bull Case
In spite of bitcoin’s recent price weakness, several analysts spoke to its rising adoption, a development considered crucial to the digital currency’s appreciation.
“There are lofty expectations around Bitcoin’s price rising in the future, especially as adoption grows,” noted Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital.
Charles Hayter, cofounder and CEO of digital currency data platform CryptoCompare, also spoke to the rising use of bitcoin, specifically on the behalf of institutions.
“There are lots of institutions looking at the space,” he stated, but there is a lot of groundwork that must be put in place before they can effectively use bitcoin.
Keeping this backdrop in mind, several analysts emphasized the benefits of investing for the long haul.
“Overall, those who have adopted a more long term strategy for investing in Bitcoin have seen the best performance,” said Greenspan.
“Therefore, many of our clients are deploying strategies like ‘buy the dip’ and ‘dollar cost averaging’ in order to scale into a long term position. This way, they’re able to take advantage of the current discount and still save some money in case prices go lower.”
“If we expand the time frame” we use to measure bitcoin’s growth, “we will see a very attractive bullish trend,” said Charles Thorngren, CEO of Noble Alternative Investments.
“This new phase of Bitcoin is no longer the easy money day trading cryptocurrency, its time for the longer term investor to stake their claim and benefit.”
Going forward, bitcoin prices have significant upside potential.
“There is plenty of growth to come,” predicted Zhang Jian, former CTO of Huobi and founder of digital assets exchange FCoin, emphasizing that the digital currency markets are still exceedingly small compared to the more traditional asset markets.
What we have now is just “a drop in the bucket,” and there are “tons of waterfalls to come!”