While the market is slowly recovering the recent biggest drop in months, the question that is haunting crypto investors is if bitcoin has reached the bottom for good or is it only temporary?
There’s no doubt that the road to the next halving, expected in May 2020, is signaled with uncertainty and probably more drops to come, according to top analysts. Many are still predicting further corrections even to the $5,000 and $4,000 levels, although they all agree that the long term is still bullish for bitcoin and the cryptocurrency market.
Let’s try to understand what’s happened and what now for bitcoin and the whole market.
On Bitstamp BTC hit $6,527 in the early hours of today, recording the biggest drop in months. That’s a 53% fall from this year’s highs against the dollar of nearly $14,000 back in June.
Bitcoin (YTD) Chart
The same occurred to all main cryptocurrencies that followed the path of bitcoin as it usually happens.
Ethereum lost 55% against the dollar since June and it’s now trading at $150 (from $335).
XRP lost its long support of $0.25 and dropped to $0.20 earlier today, marking an astonishing drop of 57% since June.
A combination of fundamental and technical analysis appears to have impacted the price so strongly.
The Binance FUD news from China, never confirmed by the major crypto exchange, and China’s recent vow to dispose of crypto exchanges and toughen up on regulation, might have affected the market sentiment but according to many that was not enough to cause the fall.
It is also believed that the interest around the crypto market has currently stagnated, with such a situation favoring the bears to take over and cause the recent turmoil.
Overall crypto market cap went from $254B on 7th November to $181B earlier today, recording a drop of 29% in only a couple of weeks.
If these numbers sound scary, you should have been around in 2017 to experience similar volatility.
Aside from the fundamentals, the descending triangle that’s been forming in the last month exactly was for many a clear indication that the price above $8,000 was not sustainable and technical analysts were ready for such a drop.
Currently, two scenarios might be expected to happen
Besides consolidation above $7,200, the market might become temporarily bullish again if the resistance of $7,300 is broken on the upside.
If bitcoin goes back down and breaks the support level of $6,500, which it managed to avoid earlier today, then we can expect further drops to the $6,000 and who knows from there.
We’re surely living an exciting time for bitcoin and the whole cryptocurrency market.
Many have welcomed this recent drop to stack more sats or buy across other cryptocurrencies.
As we constantly say, make sure you’re ready for any type of scenario but selling when the price is going down means losing the game if you believe bitcoin will go back to all-time highs in the future.