After the crypto market experienced a violent correction phase at the beginning of 2018, analysts and investors have been trying to figure out whether if it has hit the bottom of its downtrend yet. Then, in the month of April, hope came in the form of a strong recovery by the crypto market – most of the coins increased by 50% and above, while the total market value of all cryptocurrencies climbed back up to $400 billion levels.
Courtesy of the recent bull run, most investors have already put the January crash in the back of their minds. Cries of “bullish” fill the market, while the influx in the daily trading volume help increase liquidity.
Nonetheless, despite all this, there are still some bearish sentiments leftover from the January crash. Nick Colas, the first Wall Street brokerage analyst to have covered Bitcoin during his time at Wall Street, advised investors to proceed with caution and think twice before entering the crypto market.
In an interview with CNBC, Colas refuted the argument that since most cryptocurrencies have recovered from last month’s crash, now is an opportune time for investors to re-enter the market.
“A lot of people [are] asking [whether] now [is] the right time to buy, and the short answer is no, for two fundamental reasons. The first is we’re not seeing a lot of incremental engagement from people interested in buying Bitcoin for the first time, and like any new technology you need new adopters to come in to make it more valuable. And in terms of Google searches, they are way down from the peaks back in December and January, [by] 85 to 90 percent…
Colas also voiced his concerns about the lack of wallet growth over the last few months, with only 2.2 percent more people opening Bitcoin wallets to store/spend their cryptocurrencies. In comparison, there was – on average – a 5 to 7 percent of monthly growth last year.
Moreover, when asked if Bitcoin’s astronomical price increase last year was a sign that it is a bubble, Colas’ answer was firm:
“Certainly in retrospect it was absolutely a bubble based around the Futures launch in December … [I’ve covered Bitcoin] since 2013, [I] fundamentally believe in the structure of the technology and the story, but it obviously has huge price volatility around it, and we’ve seen that even in the past month with [the market] rallying as much as it has.”
