How the mighty has fallen. When the New Year was starting, Bitcoin was hovering around $20,000, an all-time value that only lasted a few weeks. After January 7th, though, the situations started to change, and the fortune of investors quickly turned for the worse: a downward trend started and, until the last hours of Tuesday, BTC was trading at around $6,400.
Enter Wednesday, and a bloodbath took down Bitcoin and most of the top 20 altcoins with it, and the world’s premier digital asset saw its price fall below the $5,600 mark for the first time in almost a year.
As of the moment of writing this piece, Bitcoin had slightly recovered to be valued at $5,611, with no gain or loss in comparison with those rates of the last 24 hours. Now, there are concerns about how much time will it take BTC to recover, and with “recover,” everybody may have managed a different meaning.
“Technical Damage” Needs to Be Repaired
Rob Sluymer, who is currently an analyst of Fundstrat Global Advisors, explained to Bloomberg that it will take “weeks, if not months” to recover from the “technical damage” that Wednesday collapse brought with it.
Actually, Sluymer talked on Wednesday, a few hours after the crypto industry’s price fall, in a note to clients. He noted that the BTC price drop has pushed markets into a “deeply oversold” territory, and also observed that the technical indicators, those that as recently as last week pointed towards a value rise, are now “not so favorable.”
Wednesday “breakdown” produced significant technical damage “that will likely take weeks, if not months, to repair to create a durable enough price ‘structure’ to support a multi-month rally,” were his exact words. He implies that before thinking about a sustained, multi-week increase, first there needs to be some stability.
Consequences All Over the Place
Not only Bitcoin’s value was severely depreciated on Wednesday (again, it touched its lowest price since October 2017 after weeks of trading sideways,) but altcoins also suffered the consequences. Ethereum, which was trading at above $200, is now in the $180 range and was surpassed by Ripple (XRP) as the top altcoin in market cap.
The fact that Bitcoin price fell below the $6,000 threshold is, according to Soichiro Tsutsumi, a trader at eWarrant Japan Securities K.K. in Tokio, a dangerous development for people in the industry, especially those who own businesses that rely on a client pool.
Shares of companies connected to crypto assets have also been going down, naturally, after Wednesday market crash. Several firms endured losses of at least 2 percent, in some cases weekly or even monthly lows.
According to Sluymer, the market for the end of the year is “stressed, but not broken.” Fundstrat actually expects a growth in stocks for the YE lead by sectors hit the hardest after Wednesday bloodbath.
Fundstrat was, at least in the early part of the summer, forecasting a future spike in Bitcoin’s value, with its head of research Tom Lee stating back then that the world’s leading digital asset would be worth $22,000 – $25,000 by the end of 2018.
By Andres Chavez
