Bitcoin decline seen as natural correction

Downturn is normal for the cryptocurrencies

KUALA LUMPUR: Bitcoin, the largest digital asset, is set to decline further to US$30,000 (RM125,700) in the next one month as there is no foreseeable catalyst to propel the price upwards at this juncture.

Last week, bitcoin tumbled to its lowest level in six months to below the US$36,000 (RM150,840) mark. It was traded at around US$36,384 (RM152,449) yesterday.

It has fallen about 50% from its all-time high of US$69,000 (RM289,110) in November last year.

Centre of Digital Assets Malaysia (Codam) chief executive officer Raja Daniel Matiin Raja Nordin described the decline of bitcoin as a “healthy correction” after its prolonged bull run, adding that a downturn is normal for the cryptocurrency market.

“We have seen a bull run of bitcoin, so this is a correction and not a crash.

“We expect the price of bitcoin to trade sideways the next one to two months.

“Currently, there is no strong sentiment to push the price upwards,” he told reporters on the sidelines of the “Crypto Talk: Cybersecurity awareness” event.

Centre of Digital Assets Malaysia (Codam) chief executive officer Raja Daniel Matiin Raja Nordin.Centre of Digital Assets Malaysia (Codam) chief executive officer Raja Daniel Matiin Raja Nordin.

It is important to note that bitcoin and other cryptocurrencies fell last week following the release of minutes from US Federal Reserve’s (Fed) December meeting which indicated it would dial back its supportive monetary policy, including reducing the amount of bonds it holds. The Fed also indicated that it may have to raise interest rates sooner than expected.

Rising tensions between Russia and Ukraine were also among the key factors that dragged the price of bitcoin earlier this week. Overall, cryptocurrencies fell along with other risk assets as investors pulled back on risk broadly.

Data from Coinglass revealed that around US$465mil (RM1.94bil) in crypto assets have been liquidated in the past 24 hours, with bitcoin trades accounting for US$167mil (RM700mil) of that total.

Coinglass is a cryptocurrency futures trading and information platform.

That said, Raja Daniel also expected bitcoin to tumble further should it drop below US$30,000 (RM125,700) due to the upcoming Chinese New Year holidays, coupled with the lack of demand.

“If it hits below US$30,000 (RM125,700), it would decline further to US$28,000 (RM117,320) within the same month.

“If it doesn’t drop below US$30,000, then we will see trading prices hovering between US$32,000 (RM134,080) and US$35,000 (RM146,650),” he said.

Raja Daniel advised investors to capitalise and rearrange their investment portfolios should bitcoin trade about US$36,000 (RM150,840), suggesting it is a good level to reposition the portfolio. His picks of the digital assets are the top 10 digital coins, including bitcoin, ripple and ethereum.

“For the new investors, invest only in the top 10 digital coins because they have strong fundamentals and are less risky investments,” Raja Daniel said.

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