The cryptocurrency exchange considers that there is currently a realignment between supply and demand. The causes of the latest drop were China and the overstimulation of the market.
In recent days, the exchange of Bitcoin (BTC) and other cryptocurrencies Binance analyzed the latest crash in the crypto asset market. It stated that this type of correction does not always mean that a bearish trend has arrived. The exchange considers that it is a situation in which the forces of supply and demand usually readjust.
According to Binance, there may be various corrections during a bullish trend like the one that the market is currently experiencing. Two of the factors that caused the most recent one were the power outages to Chinese miners and an overstimulation of the market.
The corrections that occur in the cryptocurrency market do not always lead to bearish markets. Several corrections preceded Bitcoin’s run until its last all-time high of nearly USD 64,000 in April 2021,” the exchange explained.
The exchange recalled that corrections like the one occurring in recent weeks usually precede recoveries. The market could resume the bullish run that it had since 2020 if this behavior takes place. However, should the corrections continue, there would be a longer period of decline.
Binance had previously cited what happened in 2017 when the pioneering cryptocurrency reached USD 20,000 per unit. After it achieved that milestone, Bitcoin underwent several corrections that turned into a bearish market that lasted for two years.
Bitcoin Is Just “Warming Up” to Regain its Bullish Trend, According to Woo
Cryptocurrency markets analyst Willy Woo believes that the bullish trend for crypto assets like Bitcoin is still intact. The researcher considers that BTC is just “warming up” for a much more important rise in its price. He came to that conclusion despite the recent correction and subsequent volatility of the cryptocurrency.
Woo argues that there is an increasing number of users interested in Bitcoin regardless of its trading price in the markets. “BTC users have roughly doubled every year since its inception a dozen years ago,” Woo commented.
For his part, Venezuelan analyst Alberto Cárdenas recently stated that the price of Bitcoin rose due to extreme leverage. The trader considers that this leverage would already be decreasing so that BTC would return to a bearish trend that would take it to USD 20,000.
Cárdenas mentioned leverage that refers to economies in general re-applying “healthier growth” measures. This would include tasks such as solving deficits, raising taxes, and issuing regulations, among others. He said that the execution of these types of measures could drive the price of Bitcoin downward as the credit cycle would end.
The truth is that Bitcoin has already proven that it can reach and exceed its previous all-time highs. The cryptocurrency has received the trust of large institutional investors, who have helped its dominance in the market grow even more. In addition to that, regulators in several countries have it in their sights as they distrust the anonymity of its transactions.
By Alexander Salazar