In the past 24 hours, the crypto market has recovered from $120 to $123 billion as the Bitcoin price avoided a further drop below the $3,600 mark.
Ethereum has also been able to rebound relatively quickly from the delay of the Constantinople hard fork, which initially caused a 10 percent drop from $130 to $116.
Due to the intensity of previous sell-offs, there exists a strong possibility that the price of BTC and other crypto assets drop below key support levels in the short term.
Some analysts see the dominant cryptocurrency declining to its 12-month low at $3,122 in the last phase of the year-long bear market before recovering by the year’s end.
Eric Thies, a cryptocurrency technical analyst, said that similar to the price movement of Bitcoin in 2015, the asset may initiate a strong upward movement by the end of 2019.
“Similar to 2015, 2019 may be the year of accumulation,” he said, even if the asset demonstrates wild volatility in the low range of $2,000 to $4,000 in the weeks to come.
However, in the upcoming months, a cryptocurrency researcher Willy Woo, best known for his work at Woobull.com, said that the on-chain volume of Bitcoin remains relatively low to suggest the establishment of a proper bottom.
Woo explained that while the steep drop of Bitcoin from $6,000 to $3,122 led to an increase in volume, it did not show any sign the initiation of an accumulation period.
Despite the technical setup that suggests bullishness is possible, there’s not a lot on-chain volume to fuel a prolonged up move. What we saw in the last 7 weeks was a spike of on-chain volume driven by volatility, coins moving to exchanges to trade. The initial volume spike false signalled a faster detox and an earlier end to the bear market, but in fact it was a volatility side effect. That move from $6k to $3k created immense trade volume, but it was in no way a signal that accumulation volume had begun.
It may take Bitcoin and other major crypto assets well over several months to begin showing evidence of accumulation in the cryptocurrency exchange market and on over-the-counter (OTC) trading platforms.
Until then, most analysts expect a high level of volatility in a low price range, which may lead BTC to revisit its yearly low.
As BitMEX CEO Arthur Hayes suggested, tokens and small blockchain networks with weak fundamentals and user bases are likely to struggle throughout 2019.
Especially if Bitcoin endures another correction prior to establishing a bottom, perhaps by the end of the second quarter of 2019, illiquid and low market cap crypto assets could experience a free fall without sell pressure, resulting in large losses against both Bitcoin and the U.S. dollar.
Featured Image from Shutterstock. Price Charts from TradingView.
Last modified: August 2, 2020 11:04 AM UTC