The bitcoin price has dipped below the $5,900 mark, after initially dipping below the $6,000 mark on June 23. Subsequent to four consecutive sell-offs as shown in the 1-hour bitcoin price chart below, BTC officially fell to a yearly low.
In February, the bitcoin price recorded a major drop from around $8,000 to the lower end of $6,000, bottoming out at around $6,050. However, on June 24, the drop of BTC continued to the higher end of the $5,000 region, entering $5,000 for the first time since early November.
Almost Identical to 2014
The price trend of BTC has been nearly identical to the fall of BTC in 2014 when it experienced an 80 percent correction from its all-time high. Conceptually, the fall of BTC in 2014 and 2018 poses no difference, given that both corrections were triggered by the eruption of a retail investor bubble.
From May 29 to June 10, bitcoin and the rest of the cryptocurrency market seemed to be recovering, recording 12 days of stability and consecutive minor gains. But, a massive sell-off on June 11 that led the price of BTC to fall abruptly from $7,700 to $6,670 initiated the start of yet another short-term correction, leading BTC to plunge to the $5,000 region.
The price trend of BTC has played almost identically to the scenario provided by cryptocurrency researcher and investor Willy Woo in late May. Woo stated that due to the extreme volatility in the market and the low daily trading volume of BTC, it is likely that BTC will experience a slow bleed out to $5,500.
As of current, many traders see a BTC bottom at around $5,000, some below the $5,000 region. But, unless the market fails to rebound at all and shows no signs of mid-term recovery, it is difficult to see BTC dropping below $5,000.
Moreover, a drop from $20,000, the all-time high price of BTC, to $5,000 would result in a 75 percent drop since its all-time high, and a drop below that mark would lead BTC to experience a correction that is worse than its correction in 2014.
Given the difference in the level of interest, hype, and demand around the cryptocurrency market specifically amongst investors in the public market, it is highly unlikely that BTC drops below $5,000 and likely that BTC settles in the lower region of $5,000.
Assuming a $5,000 Bottom for BTC, Where Does it go?
Investors in the public market, especially Wall Street, often develop a strong interest in an asset or a commodity that drops 70 to 80 percent in value in the short-term because it represents a viable buy opportunity.
Mid to long-term traders and investors are not momentum traders; they aim for investment opportunities that could generate strong gains in the next 12 to 24 months.
Bitcoin has seen this exact movement in 2010 and 2014, and minor corrections in between 2014 and 2018. Every correction has led BTC rebounding past its previous all-time highs and establishing a new high at a region that is 100 to 300 percent higher than the previous region.
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Last modified: March 4, 2021 5:09 PM