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Expect 30% Pullback in Bitcoin Market, Analyst Warns

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Bitcoin bull run is about to hit a hard wall of resistance, according to independent financial analyst Josh Rager.

The benchmark cryptocurrency could fall by as low as 30 percent, said the Blockroots co-founder, while taking cues from his earlier pullbacks. He noted that BTC/USD has a knack for logging extreme retracements after it rallies relentlessly, mentioning nine of such cases in the recent history wherein bull markets resulted in the corrections of at least 30 percent.

The bearish analogy appeared despite a healthy outlook for the Bitcoin market in the long-term. The cryptocurrency surged about 90 percent in 2020, trading as high as $14,098 on Friday. That was its highest level since January 2018, when it was correcting lower after logging an all-time high near $20,000 in the previous month.

Many traders, including Mr. Rager, agree that Bitcoin reclaimed the $14,000 level upon a general agreement that the cryptocurrency is a hedging asset against inflation. It has a limited supply of 21 million tokens, which outweighs the potential benefits of holding fiat currencies with an infinite supply.

The rise of coronavirus cases and its potential impact on the global economy has prompted central banks to unleash unprecedented quantitative easing policies. More money is entering the market that is sapping its purchasing power. As a result, investors are actively migrating their cash reserves to relatively riskier assets, which includes stocks, gold, and Bitcoin.

That explains the cryptocurrency’s incredible price rally since March 2020 – of up to 265 percent as of Friday.

“Let the Dips Come”

Mr. Rager sees the upcoming bearish correction as a natural response to a bull run. The analyst admitted that the “dip” would prove instrumental in attracting more investors to the Bitcoin market. To them, it would be an opportunity to secure a scarcer asset for a discount.

“In the long run, we know where this is going (up),” said Mr. Rager.

A majority of these investments expect to come from traditional firms. Bakkt President Adam White told the Wall Street Journal that hedge funds, brokerage houses, and other mainstream trading companies are “taking a hard look at crypto and bitcoin.” He reported that daily trades on their futures platform surged from 1,300 in late 2019 to 8,700 in September 2020.

Bitcoin’s adoption is also increasing the payment services sector.

Bitcoin shows signs of pullback while approaching the US election day. Source: BTCUSD on TradingView.com

Just recently, PayPal’s decision to add cryptocurrencies to its existing list of offerings worked as a major bullish catalyst. That, combined with hundreds of millions of dollars worth of investments from software firm MicroStrategy and PayPal-rival Square, helped the Bitcoin market cap rising from $130 billion in January to about $255 billion in October.

More Stimulus – More Bullish Bitcoin

Bitcoin’s ability to survive a 30 percent bearish correction also grows higher as the market awaits the second stimulus relief package from the US government.

The fund is now at an impasse given Tuesday’s US Presidential Election. Economists agree that a clear win for either Joe Biden or Donald Trump would take the stimulus deal out of its months-long deadlock. The market expects the US Congress to dispatch at least $2 trillion as a surge in coronavirus cases continues to threaten American households and businesses.

A stimulus deal would pressure the US dollar lower. It means more reasons for investors to “buy the dip” in the Bitcoin market.





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Bitcoin

Bitcoin sheds $2.5K amid warnings of a repeat BTC price dip

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Bitcoin (BTC) fell precipitously on June 25 after a rejection above $35,000 sparked a rout toward familiar support.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Bitcoin heads back towards $30,000

Data from Cointelegraph Markets Pro and TradingView tracked BTC/USD as it shed over $2,500 during trading on Friday.

The pair had hit local highs of $35,400 overnight before abruptly reversing trajectory to fall below $33,000.

For popular trader Crypto Ed, the situation was similar to events last month after BTC/USD first bounced at $30,000 support.

“Current, sluggish PA reminds me of a similar situation a few weeks ago….. I thought we did a 1-5 and started next cycle but after 1 more top, BTC made a deeper correction,” he commented on an accompanying chart.

“Thinking we might get the same here.”

BTC/USD scenario. Source: Crypto Ed/ Twitter

That would place Bitcoin in a position to rechallenge the $20,000 corridor which it briefly broke into several days ago.

As Cointelegraph reported, the mood among many traders remains skewed to the cautious side after BTC/USD failed to reach a $37,000 target before its latest rejection. The possibility of a new lower low is thus far from off the cards.

BTC buy interest remains

Signs of underlying confidence nonetheless remain.

Related: Bulls on parade: Galaxy Digital and Alameda pundits tip market recovery

On Friday, it was again El Salvador and its Bitcoin law in the spotlight after president Nayib Bukele announced that every eligible citizen would receive $30 free in BTC for downloading its wallet.

Institutional bullishness meanwhile came in the form of the Purpose Bitcoin ETF, which continued to add to its assets under management throughout the price dip.

Meanwhile, altcoins were flat, with no single asset managing to break out of established trading zones.