It’s been a crazy past two days for Bitcoin and cryptocurrency investors; after holding $7,700 for a number of days, BTC began to tank on Thursday, dropping under $6,000.
Many saw this as a move correlated with traditional markets, which also saw a brutal performance due to a series of events regarding the coronavirus outbreak and the brewing oil crisis: Tom Hanks and his wife announced they had been infected, all major sports leagues said they would suspend their seasons, Donald Trump revealed he would be shutting down travel from Europe, and oil started to fall once again.
As the futures of American markets collapsed, so did Bitcoin.
Since our last market update, BTC’s prospects temporarily got worse, with the cryptocurrency dropping as low as $3,800 (and even lower on some exchanges due to what seemed like technical and liquidity issues) for mere minutes as can be seen below.
This meant that at yesterday’s worst, the cryptocurrency had lost 50% of its value in a single 24-hour period. Ethereum posted a similar loss, briefly falling under $100 for the first time since 2018’s bear market.
As explained in a Blockonomi piece previously, the overall weakness in the cryptocurrency market, not just Thursday’s tumult, can be attributed to multiple things:
- Bitcoin’s growing volatility, former Goldman Sachs executive Raoul Pal has explained, has forced hedge funds and institutions that have stake in the space to liquidate their positions to derisk their portfolio.
- Bitcoin miners have started to hoard coins. ByteTree founder Charlie Morris, who deals with analytics in crypto, has historically coincided “with negative returns and reflects a weaker market bid.”
- The operators of the multi-billion-dollar PlusToken scam have begun to move Bitcoin to exchanges.
- There is a lack of liquidity in the market seeming stemming from the coronavirus issues.
Fortunately, things are starting to stabilize for the cryptocurrency market, with Bitcoin holding above $5,500 for the past couple of hours as global markets make a rebound after a near-unfettered 30% drop. Unfortunately, some have said that as the market’s volume is extremely thin at the moment, more volatility could be well on its way.
Not the End of the Line… Yet
While many in the cryptocurrency space were throwing in the towel when the price briefly dropped under $4,000, it isn’t the end of the line just yet for Bitcoin and its ilk.
Nunya Bizniz noted that with the rally after Thursday’s crash has taken the cryptocurrency above the 200-week simple moving average — a level the cryptocurrency has not closed below in its decade in existence. Bizniz said that $3,800 “may turn out to have been one of the best entry points.”
Indeed, while Bitcoin has wicked below the 200-day moving average, it has yet to close a candle above this uptrend.
The current dips below the log curve (blue) and the 200 week MA (red) were twice as deep as the next closest.
This may turn out to have been one of the best entry points. pic.twitter.com/M4tHCIdboC
— Nunya Bizniz (@Pladizow) March 13, 2020
Furthermore, analyst Moe noticed that there was an extremely bullish candle printed on the three-day chart of Bitcoin: the TD Sequential printed a nine candle, which is often where prices reverse.
Even whistleblower Edward Snowden is feeling bullish on Bitcoin. He wrote in a recent Twitter message that he thinks the recent crash in the price of the cryptocurrency comes without reason.
Snowden used Bitcoin during his whistleblowing days last decade, and he has spoken (virtually) at a number of conferences in the industry, lauding the industry’s goal to decentralize everything and to make money more “free.”