By CCN: The bitcoin price has surged by seven percent in the past several hours from $7,300 to around $8,000 in major markets including the U.S., demonstrating a strong recovery from its abrupt drop to $6,400.
On May 17, as CCN reported, the bitcoin price briefly plunged to $6,400 by more than 18 percent against the U.S. dollar.
Analysts including Dovey Wan, a founding partner at Primitive, stated that the brief price drop of bitcoin on Friday was likely due to manipulation engaged by a single investor.
As the investor sold 5,000 BTC on Bitstamp, it triggered contracts on BitMEX, which heavily relies on Bitstamp, to get liquidated.
Since dropping to $6,400, in less than two days, the bitcoin price has recovered to $8,000, by more than 25 percent within a 48-hour span.
The immediate absorption of the $13 billion decline in the market capitalization of bitcoin demonstrates the significant improvement in the sentiment around the cryptocurrency market.
Speaking to CCN on May 13, a cryptocurrency trader with an online alias “Satoshi Flipper” said that bitcoin is likely to face healthy retracement in the near-term coming off of a rally from $5,000 to $8,000.
But, the trader emphasized that once the retracement occurs, the dominant cryptocurrency is on track to sustain its momentum over the medium to long-term considering the momentum of the market in recent weeks.
The trader said:
I’ve been definitely vocal about a healthy BTC retrace, but I do not believe it will be a drastic 30% retrace back into the $4k’s. Once we form a local top, I believe we will 10% at the most, then settle down sideways.
That is when we’ll have a real altcoin season that everyone is expecting. Upon the immediate retrace, altcoins will take a small hit, but then when BTC settles down sideways, altcoins will rebound in a huge way.
Similarly, in an exclusive interview with CCN, Three Arrows Capital CEO Su Zhu stated that the brief fall of bitcoin to $6,400, which led investors to be cautious about the short-term trend of the asset, is unlikely to lead to a full-blown retracement.
“This is a purely market structure related move, I expect it to be bought up extremely quickly,” Zhu said.
As suggested by some investors, the market quickly absorbed the abrupt decline in the bitcoin price on May 17 and with volumes across the board on the rise, the momentum of the asset is expected to be sustained.
The real 10 volume of bitcoin, which estimates the legitimate volume of the asset using the methodology created by Bitwise Asset Management, hovers at around $1 billion. In comparison, in March, the real 10 volume of bitcoin was at $270 million.
According to Josh Rager, a cryptocurrency technical analyst, if bitcoin finds stability over the $8,200 level, the $9,000 region could be considered a reasonable target in the near-term.
“Bitcoin certainly looks to be pumping, now over previous resistance Price is near $8,000 & looks to be heading toward the $8,200 1D resistance (might consolidate prior) A close above $8,200 on the daily/weekly would be very bullish and would target $9,600+,” said Rager.
With the block reward halving expected to occur in May 2020, which historically has been a fundamental catalyst for bitcoin, and the custodial infrastructure supporting the asset class noticeably improving, the sentiment around the market may continue to progress in the upcoming weeks.
Click here for a real-time bitcoin price chart.
This article was edited by Samburaj Das.