Investing.com — Analysts at Wolfe Research maintained a bearish outlook on the broader cryptocurrency market in a note Thursday, citing poor recent performance and declining investor confidence.
According to the firm, “it has not been a pretty few months for cryptocurrencies, or for risk assets in general.”
They note that Bitcoin is now down 25% from its highs, while and have fallen even further, by 45% and 40% respectively.
“We are seeing cryptocurrencies underperforming all major asset classes and there is no sign of relief so far,” the firm added.
They believe that “risk appetite and overall confidence are at their lowest level in several years,” which is reflected in investors' reluctance to place bets in the cryptocurrency market.
This lack of enthusiasm has also led to gold significantly outperforming Bitcoin since March, according to Wolfe Research.
The firm notes that its proprietary trend model, which has successfully guided investors over the past five years, turned negative for Bitcoin in April.
Since then, they say it has only briefly moved into a neutral stance before returning to bearish territory.
“At the end of the day, we are objective trend followers and therefore will continue to maintain a bearish view on Crypto until the trend improves,” Wolfe analysts said.
Looking ahead, Wolfe Research has pointed out a key price level for Bitcoin, suggesting that if the cryptocurrency drops below $50,000, the next major area of support will be around $42,000.
Until the overall trend changes, Wolfe remains cautious on cryptocurrencies, waiting for signs of a significant recovery.
