The last few days have been pretty good for Bitcoin and even made it recover some of the losses that it made. Bitcoin was on an upward surge. It managed to defend the $6400 support level, and traders were anticipating it will move to the next support level until it reaches at least the $7500 support level. The last 48 hours have, however, been different as bitcoin assumed a bearish trend crashing all the hopes of crypto traders.
Data from the major crypto exchanges such as BitMex suggest that there is a drop in the demand of bitcoin. As per the history of the trends like the one in 2018, bitcoin would require a longer time to recover to assume its position. The last time Bitcoin dropped drastically to the $3000 region; it took up to four months for it to recover. That, therefore, means that its price has recovered too fast this time around, which has never happened in history.
According to analysts, whales, wall street, and institutional investors are responsible for the change in trend in the price of bitcoin. This is mainly because the open interest across the main future exchanges also dropped. As a result, the open interest for Bitcoin futures contracts also dropped. The drop in the interest of the futures market is what led to a bitcoin price correction, and that led to an uproar in the cryptocurrency market.
Some analysts still believe that the US stock exchange has still not reached it’s extreme yet. The pandemic is still spreading, and currently, the US has more COVID-19 cases than China. That means that the Bitcoin futures market is at stake, hence the price of Bitcoin is also at stake.
Is Bitcoin at risk for another correction?
Several traders and whales are anticipating several market cycles in the price of Bitcoin. According to a renowned Bitcoin trader PenterhUdi, there is a 200-week moving average that is expected, which may make the price of Bitcoin to recover to $8500. He predicts that there will be a second correction expected at $3000 level due to the bearish potential of the market.
Bitcoin does not correlate with the traditional markets since March 25. According to a venture capitalist Chris Burniske, however, Bitcoin can still attain the lows of $3000. That means that the Bitcoin market has not yet recovered, even though it achieved a 60% correction within 3 weeks. Attaining a bullish trend at the macro level will need more time.
The trends in altcoins also affect the price of Bitcoin. For altcoins, there is a likely downward trend anticipated since there is a general drop in interest in cryptocurrencies.
According to strategists, the US will take longer in dealing with the Coronavirus pandemic as compared to China, which puts the US stock markets at risk as to the futures market open interest will be on a decline.
Image from Flickr.com
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