A ray of hope has appeared on the cryptocurrency horizon. It looks like more investors are beginning to allocate their funds to the digital currency arena, thus suggesting that the space is making a comeback.
Is Cryptocurrency Returning to Form?
This is being viewed as a solid move in the right direction by analysts, who now say that perhaps cryptocurrency prices are potentially bottoming out and the bear market is coming to an end. This has arguably been one of the worst – if not the worst – periods in the history of the cryptocurrency space. The world’s largest and most renowned coins – including Ethereum and BTC – have ultimately lost most of their 2021 gains, and it may take a while before things really show signs of recuperating.
Bitcoin, for example, was trading for an all-time high of roughly $68,000 per unit last November. However, at the time of writing, it is trading for just a little over $30,000, and this is an overall improvement from the mid-$20,000 range it hit in May. A sad story indeed. This means in just eight months the currency has lost more than 50 percent of its overall value.
Ethereum has also lost quite a bit. It was trading for close to $5,000 per unit at around the time bitcoin was spiking, though recently, ETH fell below $2,000. While some recovery has occurred in recent days, there isn’t much to show just yet. Overall, it is believed the crypto space lost over $1 trillion in value.
The period has brought back a lot of negative memories from 2018, which saw similar circumstances surrounding the crypto world. By the end of that year, bitcoin had fallen from a then all-time high of about $20,000 to the mid-$3,000 range, meaning the crypto asset shed more than 70 percent of its overall value.
Now, however, it looks like things may be improving. Ben McMillan – chief investment officer at Arizona-based IDX Digital Assets – explained what he thinks is the reason behind the crypto resurgence. In an interview, he stated:
It’s largely institutional, and to a degree retail investors, recognizing that the pain is already endured, and we’re closer to the bottom than we are to the top.
Data from Crypto Compare shows that average inflows to cryptocurrency funds reached more than $66 million in May of this year. This is a huge improvement over the dismal $49 million that was witnessed just a month before in April.
More People Are Liking Crypto
According to Kraken, several assets under management of popular exchange-traded funds have also surged in the past few weeks, with the Pro Shares bitcoin ETF, for example, jumping by as much as six percent.
Arcane Research also shows that global bitcoin holdings in crypto-based ETFS hit an all-time high of more than 205,000 units in June.