Cryptocurrency prices have been rising over the last week, giving investors hope it could recover from its dramatic slump.
Bitcoin was valued at around $23,600 on Wednesday morning – up almost 8 per cent in the last 24 hours. It was worth less than $19,400 a week ago.
Crypto prices are up almost across the board. Ethereum has climbed from just over $1,000 to $1,560 over the last week, while the likes of XRP, Binance Coin, Cardano, Dogecoin and Shiba Inu have also seen gains.
But will the upwards trend continue, and what do experts predict for the future?
Why have crypto prices gone up?
Cryptocurrency prices have tracked closely with the stock market this year.
Markets have largely been in a downturn, but have rallied across the US, Europe and Asia recently, helping crypto follow suit.
Another likely trigger for the upturn in fortunes is the impending technology upgrade for Ethereum, which has now been scheduled for September.
Ethereum jumped by 12.5 per cent immediately after a developer tweeted that launch is targeted for 19 September.
This upgrade, known as Merge, could be significant for the entire crypto industry, as Ethereum is the blockchain that hosts the majority of Web3’s infrastructure, including NFTs and gaming assets. Many see this as the future of digital currency.
Finally, the market may have finished suffering the fallout from multiple recent setbacks, including the collapse of Terra’s Luna stablecoin and the Celsius lending site.
More from Cryptocurrency
Is the crypto slump over?
Despite the recent price rise, experts are not getting too excited about an end to the crypto winter just yet.
Crypto expert Wendy O told NextAdvisor: “We’re in a full-blown bear market, not a bear cycle. Just because we see some positive price action doesn’t mean we’re out of the clear.
“We’re currently trading (Ethereum) at $1,500, and in order for me to be super bullish on Ethereum, I would need to see us break above $2,248. That’s a 50 per cent price pump right there.”
Joe DiPasquale, CEO of crypto asset manager BitBull Capital, said: “While Bitcoin saw positive momentum this week, it remains range-bound when you take a broader view, and is still struggling to cross the $22,000 resistance.
“For now, we remain interested in the bottom of this range when it comes to Bitcoin’s price, and are monitoring for accumulation during this range-bound movement.”
Edward Moya, an analyst at broker Oanda, told Barron’s there is hope of a continued upturn.
“Wall Street is enjoying a positive risk-on mood that is good news for cryptos,” he said.
“If Bitcoin continues to stabilize here over the next two weeks, the crypto winter could be over. Market positioning became extreme and that could allow for the bottom to have been made if the institutional money buys in.”
How risky is cryptocurrency?
People invest at their own risk and cryptocurrencies are not regulated by British financial authorities.
All crypto investments are risky, but meme coins like Shiba Inu are particularly volatile, and you should be prepared to lose everything you invest.
The Financial Conduct Authority warned in January: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money.
“If consumers invest in these types of product, they should be prepared to lose all their money.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, previously explained the risks to i.
She said: “On top of being extremely volatile, most cryptocurrencies are unregulated, which not only adds another layer of uncertainty but also means that investors have little or no protection against fraud.”
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