In the last 24 hours, the prices of major crypto assets have fallen by more than 5 percent as the Bitcoin price declined by around 2 percent.
In consideration of the pattern of BTC since early January of achieving lower highs across four consecutive weeks, some traders expect Bitcoin to test its 12-month low.
In mid-December, Bitcoin dropped to as low as $3,122 against the USD. After showing some signs of recovery in the latter half of the month, the dominant cryptocurrency initiated a continuous sell-off.
In the long-term, most executives and investors in the cryptocurrency sector believe digital assets can recover to 2017 peak levels.
In the short-term, however, the vast majority of investors in the space unanimously agree that digital assets will face more bloodbath.
Some, including Charles Hoskinson, the co-creator of Ethereum and founder of Cardano, are more bearish on the upcoming few months in the digital asset market than others.
Previously, Hoskinson said that the price of cryptocurrencies could take 11 years to recover to their all-time highs.
Throughout the past several weeks, traders like DonAlt and Hsaka have emphasized that it is crucial for Bitcoin to maintain stability above the $3,400 to $3,500 range.
The failure to hover above the tight range could result in downside volatility and a retest of the asset’s 12-month low.
In December, DonAlt said that if BTC falls to the low region of $3,000, a drop to the $2,000 region is inevitable with $2,900 as a viable target.
“Closed below support, not looking too pretty. BTC needs to reclaim supports quickly otherwise. I expect it to go for the previous lows. If those don’t hold I’m looking at $2,900. There are no supports left on the daily, hope for a fakeout or SFP at the lows,” the trader said.
With the volatility of BTC testing a new zone for the first time since mid-2017, a large price movement is expected.
It remains uncertain whether the spike in volatility would lead to an upward or a downward movement for BTC.
Based on the past performance of BTC since early 2019, traders generally expect the asset to demonstrate weakness in the short-term.
As CCN.com reported, Matt Hougan, the global head of research at Bitwise, told Bloomberg’s Barry Ritholtz that the cryptocurrency sector is like the dotcom bubble.
It did the same thing that happened with the Internet, which is it attracted a huge amount of talent. It did bring a lot of capital and interest in development to the ecosystem.
So, I do think interesting things will be born from that. But, yes, it was a difficult year in 2018.
I think [bitcoin] is the next dotcom. Remember, the dotcom bubble created Pets.com, but it also created Amazon.
In late 2017, the interest toward cryptocurrencies from the mainstream was so high that every mainstream media outlet in every major region extensively reported about the emerging asset class on a daily basis.
Psychologically and financially, it will be difficult for retail investors, who primarily fueled the bull run of digital assets two years ago, to recover.
For that reason, some investors expect a wave of institutional investors to drive the next rally of cryptocurrencies, possibly by the year’s end.
But, whether institutional money or retail investors contribute to the gradual recovery of the asset class, the short-term outlook on the cryptocurrency market remains poor.
More importantly, institutional investors, Bakkt, Fidelity, and Nasdaq are all long-term catalysts that will not have an immediate impact on the prices of crypto assets.
In the first two quarters of 2019, traders see the bear market extending especially if BTC falls below a key support level at $3,000.
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Featured Image from Shutterstock. Price Charts from TradingView.
Last modified: June 14, 2020 11:10 AM UTC