As CCN.com reported yesterday, on May 24, the bitcoin price dipped below $7,250 as a massive sell-off from the $7,700 mark intensified. After three consecutive sell-offs within a 24-hour period, the price of bitcoin dropped from $7,900 to $7,250, eventually stabilizing at $7,400.
The cryptocurrency sector is in a short-term bear cycle. In a highly volatile period like this, positive developments and events that would otherwise lead to a significant surge in the valuation of the cryptocurrency market often do not affect the market in a major way.
As such, in spite of the entrance of financial institutions like the New York Stock Exchange, Goldman Sachs, and JPMorgan, the cryptocurrency market has continued to decline.
Based on the price trend of BTC over the past two months, it is possible that the correction continues to the higher end of the $6,000 region, considering the overly strong downward trend of BTC and other major cryptocurrencies in the global market.
Throughout its recent history, over the past 12 months, bitcoin recorded three major drops. As seen in the 1-day price chart of BTC below, all three correction bounced back on a similar support level at $6,600. When the bitcoin price dropped from $20,000 to the $6,000 region, the bitcoin price rebounded to $12,000 after securing the $6,600 support level.
A similar trend occurred when the price of BTCdropped from $11,000 to $6,400 and so on. It is possible that the BTC price bottoms out in the mid $6,000 region once again and immediately initiate a strong rally back to the $10,000 to $12,000 region.
In the first quarter of 2018, when the BTC price dropped to the $6,000 for the first time in 2018, Chinese billionaire angel investor Wang Feng purchased 10,000 BTC in the $6,600 region. Along with bitcoin, Feng bought Theta, Ontology (ONT), Cortex (CTXC), ArcBlock (ABT), Zipper (ZIP), YeeCall (YEE), Dxchain (DXC), Charter (CAF).
10,000 BTC, which is worth around $76,000,000, is an amount of bitcoin that is difficult to purchase on cryptocurrency exchanges without significantly driving the price up in the short-term. Feng most likely had purchased $76 million worth of bitcoin in the over-the-counter (OTC) market or directly from miners.
A bulk purchase of bitcoin of over $50 million requires significant confidence in both the short-term and long-term price trend of BTC. Feng likely assumed that $6,600, the major support level for bitcoin, would remain as the bottom even for future corrections and bear cycles.
“When asked about the market crash in March, he dismissed it as no big deal. He called it a short-term setback and in fact, said Cryptocurrencies rose very well in the long term,” CCN.com reported.
If the bitcoin price drops below $7,000 and to the higher end of $6,000, the market will likely experience a strong bounce and record a major rally throughout the third quarter of 2018, potentially back to the $10,000 and $12,000 region, as it did in March.
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Last modified: June 11, 2020 10:09 AM UTC