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After Bitcoin and Ethereum Prices Crash, ‘Crypto Winter Now Hangs in the Balance,’ Says This Expert

An image to accompany a story about the latest cryptocurrency crash Illustration by NextAdvisor
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Bitcoin and ethereum plunged by more than 30% over the last week, marking a new low for the two most well-known cryptocurrencies on the market. Bitcoin dipped under $21,000 and ethereum fell below $1,100 Wednesday.

With continued rising inflation and the S&P 500 falling into bear market territory Monday morning, one expert warns that a “crypto winter now hangs in the balance.” “Crypto winter” describes when prices fall and remain low for an extended period, such as they did in between early 2018 and mid-2020.

“Crypto hobbles into the week somewhat beholden to the whims of the stock markets, clearly on pins and needles over May inflation numbers — the U.S. Consumer Price Index (CPI) report dropped on Friday,” says Rich Blake, a financial consultant at Uphold, a crypto exchange. “Economists expected the CPI to rise 8.3% year over year, but the headline inflation level actually came in at 8.6%. Wall Street was groping for a sign that inflation may have peaked. So is the Federal Reserve.”

Cryptocurrency Prices Today: Bitcoin, Ethereum (June 15)

Bitcoin, ethereum, and the broader crypto market continue to slump amid macroeconomic uncertainty that’s being driven by surging inflation, a shaky stock market, rising interest rates, and recession fears. 

Bitcoin dipped below $29,000 Friday following the release of May’s inflation report, and continued to nosedive through the weekend, hitting its lowest point in over a year Monday. The largest crypto continued to slide Wednesday — inching closer to $20,000, a new low.

The crypto market has been increasingly tracking the stock market, which has been trading in the red recently. Stocks fell sharply Monday morning, with the S&P 500 starting the week in bear market territory for the second time in the last month. The S&P 500 has fallen nearly 21% in 2022, while the tech-heavy Nasdaq has been hit harder, down 31% this year.

Bitcoin has slid for nearly 12 straight weeks, falling from nearly $49,000 in March to under $21,000. Ethereum has followed a similar pattern, going from $3,500 in March to below $1,100. And some experts have predicted that bitcoin and ethereum could drop even further if economic conditions don’t improve.

Along with sinking prices, the popular crypto lending platform Celsius suspended customer withdrawals Sunday due to “extreme market conditions.” This has prompted concerns around another potential collapse as well as another potential forced seller of bitcoin collateral in the market, according to Ben McMillan, CIO at IDX Digital Assets.

“This comes right after the collapse of Terra Luna and continues to fuel concerns about counterparty risk among crypto platforms,” says McMillan. “Also, traders are looking closely at the $21,000 level for bitcoin, the point which Michael Saylor said MicroStrategy would start to get margin calls potentially unleashing another wave of forced selling of bitcoin into the market.”

What Experts Are Saying About Today’s Crypto Market Crash (June 15)

Here’s what a few experts are saying about Monday’s prices, in emailed comments, newsletters, and on Twitter.

Rich Blake

Point of view: Financial consultant at Uphold

Reaction: “Bitcoin bears certainly are in ruckus mode, berating the largest crypto the way a schoolyard bully seeks out for tormenting the same easy mark. Sell pressure left bitcoin clinging to $26,000 last night and it was sending all the wrong signals heading into the overnight hours.  As far as support levels, the next few days surely will test digital assets if a faster pace of tightening and more aggressive rate hikes are announced. For the moment, extreme market conditions and fed policy updates are exacerbating the consequences for crypto assets.”

Tammy Da Costa

Point of view: Analyst at DailyFX

Reaction: “Bitcoin prices suffered after the U.S. consumer price index rose to a four-decade high. With fundamentals currently driving price action, the economic calendar remains key for digital assets. Throughout the week, the release of high-impact economic data has exacerbated fears of rising inflation, weighing on stocks and cryptos alike. As the war in Ukraine rages on, rising food and energy costs continue to support higher prices, placing additional pressure on policymakers to implement more aggressive monetary tightening measures in an effort to drive inflation lower. Bitcoin has fallen by 37% year-to-date as the speculative asset remains vulnerable to the geopolitical backdrop. Although fundamentals remain the prominent driver for price action, major technical levels may act as an additional catalyst for both the immediate and longer-term move.”

Brett Scott

Point of view: Crypto expert and senior fellow at The Finance Innovation Lab

Reaction: “I’ve heard a lot of people claim that bitcoin is somehow a unique weapon to protect yourself from inflation. The current crypto crash should make you doubt that … because bitcoin tokens (unlike shares or race art) are branded as money. And because they’re highly moveable, they have the superficial appearance of ‘money.’ This means this volatile asset can be pitched as if it were a ‘deflationary’ currency that fights inflationary ones. But really bitcoin tokens are just a new contender in the inflation-hedging asset purchase category. They’re not competing against the dollar. They are competing against shares, rare stamps, art, land, and anything else that can claim to rise in monetary price over time.”

Anthony Pompliano

Point of view: Crypto expert, podcaster, and co-founder of Morgan Creek Digital Assets

Reaction: “It is important to understand that bitcoin’s current drawdown in price is largely driven by changes in the macro economy. Increases in interest rates, coupled with quantitative tightening, have driven correlations across assets towards one and we are seeing asset price sell-offs across the financial market. Bitcoin’s price falling is not fun. But value measurements of bitcoin are telling a different story. The best investors understand that controlling their emotions in these moments is important. They make decisions based on value, not price. The big variable here is the Federal Reserve — they are in control and assets generally are one big trade right now.”

How Investable Are Bitcoin and Ethereum Right Now?

There’s a lot to consider before investing in crypto. You’ll want to make sure you have an emergency fund, have paid off high-interest debt, and secured a traditional retirement plan beforehand. If you’ve done that, considered the risks, and feel like you’re ready to invest in some crypto, experts generally recommend keeping any crypto investments below 5% of your portfolio and only investing what you’re ultimately comfortable with losing.

But you may be wondering which cryptos to invest in if you’re just starting out. According to NextAdvisor’s Investability Score, ethereum and bitcoin are still among the best cryptos you can invest in right now. Experts we’ve spoken to over the last year have also said that it’s a good idea to start with those two, which are the most well-known cryptocurrencies on the market right now.

Bitcoin has the highest score of all cryptocurrencies, with ethereum close behind — even if there’s a return to prices closer to their all-time highs in late 2021. Here’s how our score shakes out for 10 cryptocurrencies that are consistently among the top by market cap, excluding stablecoins, for reference:

COINNEXTADVISOR INVESTABILITY SCORE
Bitcoin (BTC)81/100
Ethereum (ETH)69/100
Solana (SOL)57/100
Cardano (ADA)55/100
Polkadot (DOT)54/100
TRON (TRX)53/100
Avalanche (AVAX)53/100
XRP (XRP)51/100
Binance Coin (BNB)50/100
Dogecoin (DOGE)39/100
Updated June 15, 2022