The cryptocurrency market has continued to slump over the past few weeks, as both major and minor cryptocurrencies followed the price trend of bitcoin.
Throughout the past 24 hours, bitcoin hasn’t recorded large price movements and remained in the range of $7,900 to $8,300. At the time of reporting, the price of bitcoin is $8,190, with relatively low trading volumes to support its recovery.
Tom Lee, an analyst at Wall Street firm Fundstrat and known to be a bitcoin bull, stated that the price of bitcoin will likely drop to a yearly low before recording a swift recovery.
“When sentiment is this weak, the market is increasingly ’fire, ready, aim’ — meaning, any headline today is likely to trigger selling,” wrote Lee, who emphasized that the next support level is $7,535, followed by $5,873. Given that the $8,370 support level has been breached, Lee explained that it is possible bitcoin could fall to $7,535, and make its way down to $5,873 before recovering to its previous levels.
While traders still believe the price of bitcoin will likely suffer another correction before a short-term recovery occurs, billionaires including Peter Thiel and Alan Howard have expressed their optimism towards the cryptocurrency market.
Howard, who acquired a massive amount of cryptocurrencies in 2017, stated that he has obtained even more digital assets this year, essentially buying the “dip.”
“Hedge fund billionaire Alan Howard made sizable personal investments in cryptocurrencies last year and plans to put more of his own money into digital assets and the blockchain technology behind them, according to people with knowledge of the matter,” Bloomberg reported.
At the Economic Club in New York City, billionaire investor Peter Thiel stated that he is still long on bitcoin, and that he is more optimistic towards the cryptocurrency than before. Thiel emphasized that he is skeptical towards everything else, including major cryptocurrencies, apart from bitcoin.
Fundamentally, bitcoin and other cryptocurrencies should be rising in value as of current, given the speedy developments that are being led within the cryptocurrency space. This week, second-layer scaling solution for bitcoin in Lightning Network was launched in mainnet, through the launch of its beta software.
“lnd-0.4 beta is a huge accomplishment by many engineers, testers, and users around the world, but it’s the very beginning for the Lightning Network. As users begin to experiment with Lightning and as the network begins to grow, we’ll be working on a number of key infrastructure components that will contribute to the instant, user-friendly experience Lightning can bring to Bitcoin and other cryptocurrencies,” wrote the Lightning development team.
However, the market is not focusing on the innovative developments happening within the space, and is depending on negative media coverage involving traditional finance experts criticizing bitcoin and other cryptocurrencies without sound arguments and evidence.
This is a period in which negative news leads to market panic while positive news does not have a huge impact on the market. Given the current trend of cryptocurrencies, while analysts agree they will recover in the long-term, major digital currencies will likely not be able to make big upward movements in the short-term.\
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Last modified: May 20, 2020 8:58 PM UTC