The world’s biggest cryptocurrency in market capitalization hit a high as trading opened in Europe last July 20. Moreover, a number of other cryptos registered an improvement in their prices. However, despite these positive developments, analysts warned potential crypto investors that putting their money into digital assets remains a risky business.
According to FxPro senior market analyst Alex Kuptsikevich, consolidation over the 50-day moving average may be construed as a positive shift in momentum by both chart-based and price action-driven traders. But he warned that people should be ready to see an upsurge in selling should the upward momentum stall the way it did earlier this year.
Kuptsikevich’s sentiments were echoed by Susannah Streeter, the senior markets analyst at British financial firm Hargreaves Lansdown. Streeter said that it is clear that investing in cryptocurrencies, given the industry’s current unregulated state, remains risky.
It is a situation that is unlikely to improve unless rules and regulations regarding the cryptocurrency sector, particularly mining, staking, and trading, are made clearer or are properly delineated.
Likewise, analysts across the industry agree that the value of digital assets remains highly sensitive to volatility in the financial market.
Despite the Gains, It Pays to be Cautious
The warning comes amid gains posted by Bitcoin and many of its competitors in recent days. Bitcoin hit nearly $23,500 per token, the highest it has been in almost two months, as Europe opened its doors on Wednesday morning.
Meanwhile, Ether’s value per token rose to $1,500, well ahead of its planned shift to a proof of stake consensus mechanism (referred to in the business as The Merge) in September of this year.
Other gainers among the industry’s biggest players included Dogecoin, up by 11%; Cardano and Ripple, up by nearly 8%; and Binance, which added 2.7% to its value.
ApeCoin registered an 8% surge in value following sustained momentum from last week’s successful metaverse game demo. On the other hand, Shiba Inu was up by 10% even without events or technical catalysts influencing its value.
According to market analysts, these gains were most likely the result of a recovery in the broader equity market as traders kept an eye on the recent interest rate hike implemented by the US Federal Reserve. Bitcoin, in particular, was riding on the recent rebound in several US stock indices, as well as a weaker dollar.