Bitcoin’s price graph sometimes looks like the jagged edge of a saw, with big jumps up and down. But when there’s a stretch of big losses without any corresponding jumps, investors might wonder: “When will crypto go back up?”
Short-term price predictions are rarely correct. When they pan out, it can be due to luck as to skill. The price of any coin — or anything else — isn’t guaranteed to go up just because it fell from an all-time high. But there are a handful of factors that could cause demand for crypto to rise:
Lower interest rates. The price of riskier investments tends to rise with lower rates.
Reduced threats of inflation (and economic recession).
Big investors getting into crypto investing (such as pension funds).
Federal regulations. Such as allowing individual investors to buy and sell crypto through traditional brokerages they already use.
Wider user adoption of blockchain technologies (including decentralized applications that rely on cryptocurrency).
So what’s an investor to do? If you’re convinced of the long-term value of Bitcoin — or crypto in general — patience and some basic investing principles can help prepare you to take advantage of any potential upswing.
Bitcoin price predictions: All over the map
Bitcoin is the oldest and most valuable cryptocurrency and is often used as a proxy for the price of cryptocurrencies. As a result, there’s a lot of speculation about where the price will head next.
You can find a wide range of predictions on crypto blogs, Twitter accounts and YouTube pages. But you won’t see many professional analysts setting price targets how they do for stocks. It’s just too hard: J.P. Morgan’s research from 2021 showed that Bitcoin is roughly five times more volatile than equities or gold and has “little to no correlation with other major financial assets.”
Those who believe in cryptocurrency‘s long-term potential might say the question is not if prices will rise again but when. And “when” can mean many different things. For example, Bitcoin could come back as furious as it did in 2021, or it could be a multi-year recovery, such as after a drop in 2013.
It’s also possible that prices could continue to go down rather than back up.
Crypto volatility can present opportunities
Crypto is a relatively new asset class, but investors can use traditional investing advice to their advantage.
“In some ways, the volatility in crypto can accrue to the benefit of savvy investors,” says Greg King, founder and CEO of Osprey Funds, a crypto investment firm. “It offers investors great opportunities to buy dips, tax loss harvest and dollar cost average.” Instead of hoping for a particular price in the near term, these investing techniques rely on forming an investing plan and executing it over time.
That scenario reminds Adam Grealish, head of investments at fintech company Altruist, of a similar chapter in investing history.
“The most apt analogy is something like the dot-com era,” he says. Many companies didn’t make it, but “some companies went through and became very valuable companies. In a lot of ways, this may prove to be an evolutionary bottleneck for a lot of the protocols and projects out there.”
According to Grealish, If you’re going to try your hand at finding winners, the dot-com era provides some useful parallels. “The winners were the ones who were well capitalized, had a business model and solved for a specific need.”
But while he thinks cryptocurrency is here to stay in some form, Grealish said the eventual size of the market is still a crucial factor in determining where prices end up long-term.
“Cryptocurrencies could remain niche,” he says. Or it could be “the new underpinning of the way we transact for a century. This is what’s exciting about it, and blockchain technology in general. That level of existential uncertainty is also what’s driving the ups and the downs.”
The author did not have positions in Bitcoin at the time of publication. The editor owned Bitcoin at the time of publication.