The restriction from the Chinese Government on Bitcoin mining on its territory caused the price to drop. Experts expect the market to remain bearish for a while due to the bearish technical pattern of the cryptocurrency.
The price of Bitcoin has hovered between USD 30,000 and USD 42,000 after its peak of USD 65,000 in April. While the sharp drop causes panic among traders, optimists believe in the value of Bitcoin and predict a bullish market.
Bitcoin mining in China concentrates 50% of the mining pools of the world. For that reason, the repression by the government against the activity caused the price to fall.
Despite its collapse, some experts predict the market will remain bearish for a while due to the bearish technical pattern. Others estimate that the price of Bitcoin could drop to USD 30,000 based on a structure known as the Symmetrical Triangle. That indicates that the value of the cryptocurrency will not increase to that point.
According to Peter Brandt, CEO of Factor LLC, there will be a decrease in a rectangular pattern. That usually shows an exchange rate that would decline to the support level of the lower rectangle at USD 30,000.
The Bollinger bandwidth is another technical indicator that suggests the falling price of Bitcoin. One common point is that the value of Bitcoin tends to hit a new low of USD 30,000.
Traders Predict that a Bullish Market Is on the Way
Although there is currently a prevalence of pessimistic predictions, veteran traders expect a bullish Bitcoin market. Their experience tells them that the cryptocurrency could go bullish again despite the risk of a bearish market.
One of the leading indicators is that institutional investors are increasingly looking to acquire Bitcoin. In this way, they take advantage of the opportunity to buy currencies at a lower price within the range of their risk tolerance.
After the dramatic drop in the price of Bitcoin in May, there has been on-chain reaccumulation of coins during eight weeks of sideways action. That information came from Sean Rooney, head of research at crypto asset manager Valkyrie Investments.
The Price of Bitcoin May Rise Again If Fear Ends
According to the bullish outlook that Willy Woo has raised, investor fear must end for Bitcoin to break to the upside. The market has been prey to uncertainty amid the rapid decline in May and the resistance that the USD 40,000 level has put up.
However, analyst Woo predicts a scenario that will allow resuming those levels and reducing fear in the market. That will be especially the case if the most clever and most experienced investors steadily accumulate Bitcoin.
According to his analysis, investors are saving an increasingly large amount of Bitcoin in the long term. Woo said that there is currently a spike in accumulation rates as the supply of coins on exchanges declines. He views that as another sign that the shortage of liquidity in the market is growing.
By Alexander Salazar