Experts See Potential for Cryptocurrency Market Recovery

The primary factors behind the current decline in cryptocurrency prices are stock market sell-offs and a strong dollar index. However, Bitcoin’s brief dip below $57,000 is seen more as a local correction than the onset of a bear phase, according to experts consulted by ForkLog.

This analysis explores whether the market still holds potential for further growth.

What Is Pressuring Cryptocurrency Prices?

Bitcoin is under pressure from market participants’ fears regarding a slowdown in the pace of interest rate cuts, says Lennix Lai, Commercial Director of OKX.

According to him, disappointing inflation data has led investors to believe that a rate cut will not occur until the second half of 2024, with some even doubting that the Federal Reserve will manage to cut rates three times in a year as planned.

Lai noted that the fear and greed index has dropped to a neutral level of 52, whereas it exceeded 80 in March.

“Ahead of the Fed meeting results, market participants are pessimistic. They expect a signal from the regulator that rate cuts should not be anticipated until inflation is under control,” the expert stated.

Another sign of investor gloom is the lack of excitement around the launch of a Bitcoin ETF in Hong Kong. Low trading volumes and demand for the instrument have led to a reduction in positions in Bitcoin and Ethereum, exerting significant pressure on prices.

Following bullish movements driven by expectations of a halving and the launch of spot Bitcoin ETFs in the US, the crypto market needs new stimuli.

“The key interest rate in the US and inflation will be the main factors affecting the crypto market in the near future. If the Fed decides to cut the rate, the crypto market will gain momentum,” Lai noted.

Trader Vladimir Cohen cites the main reasons for the price drop on April 30 and May 1 as investors’ risk aversion, stock market sell-offs, and a strong dollar index ahead of the Fed meeting and a press conference by its chairman, Jerome Powell.

“In anticipation of the launch and high demand for Bitcoin ETFs, the first cryptocurrency doubled in 100 days, and such rapid growth logically leads to a correction. Currently, it stands at only 22%. If we consider the standard Fibonacci correction of 38.2%, it would be at the $45,000 level,” he explained.

Nevertheless, Cohen believes that the upward trend in the crypto market remains intact:

“On the contrary, such a correction will attract more buyers and provide a stronger impetus for further growth. Bullish cycles last two to three years, and we are in the first half of one. The main growth will begin in the autumn of 2024.”

He notes that in the current cycle, all corrections have not exceeded 25%. Therefore, this time it will “likely stop at the $50,000 level,” where major players will start accumulating positions.

Short-Term Bitcoin and Ethereum Price Forecast

According to Vladimir Cohen’s forecast, Bitcoin is likely to trade in the $50,000–58,000 range, or $48,000–55,000 if the Fed does not hint at a rate cut in September.

Ethereum is currently following the first cryptocurrency, although, unlike it, has not rewritten or even reached past highs. Here, disappointment over the minimal chances of an Ethereum ETF launch in May should be considered.

“I don’t think Ether will be actively sold. More likely, it will settle in the $2800–3200 trading range and will definitely start growing faster than Bitcoin in May-June, once the main negative sentiment around the asset is played out,” the trader added.

Institutional investor demand for Ethereum could lead to a dump, but Cohen points to a very strong support level for the coin — $2500. Even if it reaches this level, a rebound and return to $3000 will be swift.

Top Performing Coins in the Current Bull Rally

According to Vladimir Cohen, over the past year, Solana and its ecosystem have shown the best performance, particularly meme coins, which have demonstrated the highest returns in percentage terms and were used to promote the “initially failed” second model of the Web3 smartphone Saga.

Among promising ecosystem tokens, the trader highlighted Jupiter (JUP), Jito (JTO), and Pyth Network (PYTH).

“This spring, infrastructure cross-chain projects performed well: Celestia (TIA), The Graph (GRT), Arweave (AR), Render (RNDR), and Stacks (STX). Last year saw a boom in AI tokens, which have already reached major highs and are gradually correcting — this includes Fetch.ai (FET), Worldcoin (WLD), and others.

The DePIN sector also performed well — many projects did well. I like Helium (HNT) and a few other coins, but I don’t expect significant growth from them,” he shared.

Among promising DePIN tokens, the expert included IoTeX (IOTX), Filecoin (FIL), and Theta Network (THETA).

Cohen identifies RWA as the main driver, which has been frequently mentioned in interviews by BlackRock’s CEO Larry Fink.

“Some tokens have shown very high returns, particularly TokenFi from Floki Inu, although [the project] essentially lacks substance. Hedera (HBAR) is also largely hype, but it is already in use.

Among the most promising projects, I would highlight Chainlink (LINK), which has a working RWA platform used by corporate clients. This coin hasn’t grown much yet, and I believe it has great potential. Also on this list are Maker (MKR), TrueFi (TRU), Synthetix (SNX), and Polymesh (POLYX),” the expert concluded.

Earlier, trader Gordon Grant pointed to a decline in confidence in the growth of Bitcoin and Ethereum.

Read more about the post-halving dynamics of digital gold in ForkLog’s special report.