Mark Dow, a former International Monetary Fund (IMF) economist who famously shorted bitcoin from $20,000 to its low in the $3,000 range, has said that bitcoin is “buyable.”
Previously, Dow said that bitcoin investors would need to “get the f**k” out if the dominant cryptocurrency does not recover to the $5,000 to $6,000 range in the near-term, as it may leave the asset vulnerable to a large drop.
In December 2018, around a similar time when bitcoin dipped to its 12-month low at $3,122, Dow told Bloomberg that he has cashed out the short contract he has maintained since bitcoin was at its all-time high at $20,000.
“I’m done. I don’t want to try to ride this thing to zero. I don’t want to try to squeeze more out of the lemon. I don’t want to think about it. It seemed like the right time.”
He also added that the fear of missing out, or FOMO, led retail investors to initiate a frenzy over the crypto market.
They just saw it was going up and wanted a piece of it. People’s imaginations can run further when they’re not tethered to facts, when they don’t understand the issue. It allowed the bubble to be much larger and much more violent. I saw the psychological hallmarks of it and there came a point where it looked like the fever was breaking.
Essentially, Dow said that the fundamentals and the basis of the bitcoin rally at the time were questionable and the crypto market had been rising to levels even industry executives in the sector were not comfortable with.
Vitalik Buterin, a co-creator of Ethereum and a respected developer in the cryptocurrency community, said in late 2017 that the valuation of the crypto market at $500 billion is difficult to justify considering the lack of progress made by blockchain projects and cryptocurrencies in various areas.
Although the cryptocurrency market went onto achieve an $815 billion valuation, it corrected and dropped to the $100 billion region the following year.
But, analysts are now visibly more optimistic towards bitcoin than in the past 15 months.
Apart from technical indicators such as the two consecutive green monthly candles of bitcoin and the break out of a crucial resistance level at $4,200, the industry has shown a high level of activity throughout the bear market.
Major financial institutions in the likes of Fidelity, ICE, and Nasdaq have pushed forward with their plans to commit to the cryptocurrency market while more conglomerates in key regions such as Japan and South Korea entered the market.
Most recently, it was reported that Yahoo! Japan-invested cryptocurrency exchange is set to launch in May with the approval of Japanese authorities and SBI Holdings, a multi-billion dollar payments giant, announced its entrance into the cryptocurrency mining industry.
According to several reports, a short squeeze on BitMEX led to the liquidation of over $500 million, which dwarfed the $80 million sell order that was preventing bitcoin from surpassing $4,200.
As soon as the asset went past a key resistance level, a short squeeze accelerated the movement.
Similar to how a $500 million short squeeze fueled the momentum of bitcoin on Tuesday, a strong catalyst or a stimulus will be required for the asset to break out and stay beyond $5,000.
One key factor in the medium-term trend of bitcoin would be remaining above $4,000 to secure three consecutive green monthly candles while the moving average indicates a positive near-term price trend.
Generally, technical analysts remain confident in the ability of bitcoin to initiate an accumulation period as long as the asset remains above $4,200.
Last modified: May 20, 2020 4:30 AM UTC