Last Updated: 12 July 2022
Bitcoin is worth less than USD 20,000 again, this is because the price has fallen 3% in the last 24 hours. In addition, the dollar is getting stronger and according to a survey, institutional investors have little confidence that bitcoin can recover in the short term. The majority even expect bitcoin to fall to $10,000.
Euro and dollar of equal value
Normally in our articles we not only mention the dollar, but also the euro because our audience is Dutch. At the moment it does not matter much, the dollar and the euro are worth the same according to Google.
That may make life harder for us, but it makes writing a lot easier. It doesn’t matter if the bitcoin price is expressed in euros or dollars, it is the same amount. Bitcoin lost as much as $1,500 in value within a 6-hour period. The temporary low was $19,803.
If bitcoin is falling against the dollar, it is not only because of bitcoin, but also because the dollar is becoming more valuable. Many national currencies, including our euro, are becoming less valuable compared to the dollar. For this, analysts look at the DXY, an index of several major national currencies which is expressed in dollars.
Strong dollar bad for bitcoin exchange rate
Research firm Delphi Digital shared the chart below, the white line is the DXY and orange is bitcoin. Both lines show the percentage difference from exactly one year ago. The higher the white line, the lower bitcoin is. This also works the other way around, when the DXY is low you see bitcoin reaching all time highs.
This chart illustrates how connected bitcoin is to the rest of the financial markets.
Although sentiment is slightly better than a week ago, the fear & greed index is still at 16, on a scale of 100. This same sentiment was shared by a surveyed group of Wall Street investors on how they view bitcoin.
Majority expect bitcoin at $10,000
Of the 950 respondents surveyed by MLIV Pulse, the majority said they did not expect a significant recovery for bitcoin. Bitcoin has currently fallen back below $20,000 and these investors think it is likely to crash further. Overall, 60% of all respondents said they expected the price of bitcoin to fall to $10,000. They consider it more likely that bitcoin will fall to $10,000 than that the price will rise to $30,000.
The remaining 40% of those surveyed are more positively inclined of course, this group expects bitcoin to be worth $30,000 rather than $10,000. Interestingly, the vast majority of these 40% describe themselves as experienced investors, while the sceptics are clearly less experienced.
Newcomers are more fearful
In this respect, the men and women of Wall Street are no different from consumers. Fear is (rightly) greatest among investors who entered the market in 2021. Not surprisingly, they bought bitcoin at a reasonably high price.
“It’s very easy to be afraid right now, not just in crypto, but in the world in general,” said Jared Madfes, a partner at Tribe Capital, a venture capital firm. He said expectations for a further decline in bitcoin “reflect the inherent fear of people in the market”.
Bitcoin and Ethereum
But neither recent price declines nor the potential challenge of central banks with their own digital currencies can dethrone bitcoin and ethereum. A majority of respondents expect one of these two to remain a driving force in five years’ time, even while a significant proportion see central bank digital currencies playing a key role.
Another great question to highlight is how the surveyed investors generally feel about crypto:
- Cryptocurrencies are all trash: 18%
- Open-minded but sceptical: 32%
- Sceptical but involved: 23%
- Cryptocurrencies are the future: 26
- Bitcoin maximalists: 2%