It is believed that a correction could come after Bitcoin’s fall below USD 7,000. According to David Puell, the bearish correction has been proportional to the rise from USD 3,000.
It was reported that Bitcoin’s price fell 10% on November 22nd, within 24 hours. Between November 21st and 22nd, the valuation of the main cryptocurrency in the market went from around USD 8,000 to less than USD 7,200. By November 25th, its value had already fallen to the level of USD 6,600, but it managed to recover between Wednesday 27th and Thursday 28th to exceed USD 7,600, according to data from Messari.
The most recent fall could be due to the Chinese authorities’ announcements to intensify the controls toward cryptocurrencies, which could have impacted investors’ attitudes. However, cryptocurrency market analysts do not believe that it is the only reason.
David Puell, Head of research at Adaptive Fund, explained that the decline of the high of this year (around USD 14,000 per BTC) has been a correction proportional to the increase from USD 3,000, the level at which the price was in early 2019.
The Adaptive Fund analyst considered some factors that may have influenced the current downtrend. For example, “the pressure on-sale” of the PlusToken Ponzi scheme, discovered in China. It should be noted that addresses associated with the scam have been liquidating thousands of Bitcoin, in addition to funds in Ether (ETH) and other cryptocurrencies.
Regarding what might have affected market behavior, positive news abounds in the ecosystem. However, it is said that, contrary to what might be assumed, what motivated such behavior was good news that did not necessarily refer to the price.
An example of that good news was the expected launch of Bitcoin futures in Bakkt. The initial activity of this derivative product was lower than expected, but the constant increase and the consecutive overcoming of its all-time trading highs have not boosted Bitcoin’s price.
Likewise, it is recognized that given the high trading volumes of the Chinese markets, any news that comes from that country can have an important influence on Bitcoin’s price.
Not all Bitcoin holders are patient to stand firm against a downtrend. Delving into the possibilities of abrupt movements in any direction, it has been said that any bad or good news can directly affect the price if people act accordingly.
Expectations in the Short Term
A correction is expected after the fall that brought Bitcoin’s price below USD 7,000. The negative news does not seem to have enough weight on the ecosystem to make the fall permanent. Rather, it is noted that many personalities have positive opinions about Bitcoin.
The emphasis is that this correction may be momentary since it does not imply a change in itself. The downward trend in Bitcoin’s price has continued since it approached USD 14,000.
Puell believes that a floor, at least locally, is about to be established. Despite this, this floor could still have “a lot of volatility,” according to the analyst.
He also assures that its long-term permanence will have to be confirmed by higher prices collated by market opinion, especially those of long and short positions of perpetual contracts in BitMEX and other derivative platforms.
By Willmen Blanco