The recent market crash demonstrates the unpredictability and volatility of cryptocurrencies like Bitcoin and Ether. Market sentiment has taken a lot of damage, so investors could avoid the cryptocurrency market for some time.
The cryptocurrency market has lost more than USD 1 trillion in the last seven days. At the time of writing this article, the market is recovering to almost USD 2 trillion.
However, a very severe sell-off shakes the market and leads to speculation about whether the drop was enough to stop the bullish market. Some consider that this is just a necessary cleansing or correction. Furthermore, they predict that Bitcoin will be worth hundreds of thousands of US dollars per unit this year.
China Could Have Contributed to the Massive Market Crash
Cryptocurrencies like Bitcoin, Ether and Litecoin, among others, are highly speculative assets. Their supporters love anonymity and, most of all, like to speculate on future price action. They wonder whether their price will continue to fall or rise to the high predictions of analysts.
It is only a matter of time before having an answer to those questions, but it is not clear yet. The recent events in the cryptocurrency market demonstrate the unpredictability and volatility that characterize Bitcoin and Ether.
Those who have entered this market have gotten used to easy profits and a seemingly endless bullish trend. That situation contributed to an environment leading the whales to cause massive shaking. Meanwhile, speculators believe that China has coordinated an effort to harm Bitcoin.
An anonymous user said that Bitcoin would crash to USD 30,000 and even indicated where to set limit orders. The cryptocurrency reached that goal and rallied to more than USD 40,000. However, some people predict that it will reach USD 25,000, so there could be more drops.
A Technical Analysis Indicates that a Correction Should Have Occurred Earlier
Since the price of Bitcoin rose from USD 4,000 to more than USD 64,000 in just one year, there needed to be a correction. Normally, no asset moves up in a straight line but Bitcoin and Ethereum came close to doing so.
The bullish trend had turned parabolic but the parabola broke, leading to a major collapse. The focus is now on whether the bullish market has ended and a bearish market will start, or if it was just a shake-up before new highs.
Market sentiment has taken the most damage, so the trend is now in the hands of whales and institutions. Given that retail trade was affected, investors could avoid the cryptocurrency market for some time. Bitcoin and other altcoins could become more attractive at lower prices, thus stoking the bullish trend.
According to data from CoinGecko, the price of Bitcoin is almost 50% below the all-time high of USD 64,000. However, analysts believe that the bullish cycle has not ended despite the current collapse that the market is suffering. Renowned expert Willy Woo warned that Bitcoin’s recovery will not be quick and could happen within several months.
By Alexander Salazar
