Trader: Bitcoin will continue to decline below $5,000
Over the past five days, the cryptocurrency market has lost $41 billion of its valuation, as Bitcoin (BTC) dropped from $6,400 to $5,170.
BTC, which maintained a high level of stability from August to November in the $6,300 to $6,800 range, plunged by more than 19 percent within a five-day span. On November 15, sell volumes of BTC intensified to a point in which the daily trading volume of BTC across major cryptocurrency exchanges hit $8 billion.
Further Drop Expected
Speaking to Forbes, a cryptocurrency trader and investor known as Altcoin Thoreau stated that the cryptocurrency market has been on a bearish trend since achieving its all-time high valuation at over $800 billion in Dec 2017.
“Price tells us the trend has been bearish since crypto’s parabolic move and top in 2017. Though the market conditions are not the same if we compare the last parabolic move for Bitcoin in 2013 to today’s market we still have some time to go before the trend reverses. The last bear market was more than 600 days and at the time of this writing the current bear market has only been 344 days,” the trader said.
Considering the sheer intensity of the short-term drop in the price of Bitcoin, the trader explained BTC could drop substantially more from its current price range $5,000 to $5,200.
“Though the two are not the perfect comparison I do think it’s important to note and keep in mind. Most indicators have bottomed out and reached new lows we haven’t seen for a long time on Bitcoin. Boom and bust cycles are nothing new for crypto and I believe we still have some time to go before reaching the bottom.”
Following the trend of BTC, most major cryptocurrencies including Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), and Ripple (XRP) demonstrated losses in the range of 10 to 30 percent against the US dollar over the past seven days.
Echoing the sentiment of Bitcoin analysts including Woobull.com founder Willy Woo, the trader emphasized that the bearish trend and negative sentiment around crypto could extend throughout the first two quarters of 2019.
“Until we see some new catalysts to change the trend we will continue the bear market into mid-2019. Bitcoin will capitulate or trade sideways while altcoins pump. Most of the gains made from alternative cryptocurrencies will flow into BTC and by then Bitcoin should achieve its a bottom and begin an uptrend before the halving in 2020.”
Several Catalysts Lay Ahead
In the second week of December, Bakkt, the cryptocurrency trading platform operated by ICE, the parent company of the New York Stock Exchange, is set to launch its Bitcoin futures market.
Unlike existing futures markets, Bakkt has a physical delivery system in place, providing investors in the Bakkt futures market with actual BTC. As such, Bakkt could have an impact on the supply of the dominant cryptocurrency which may trigger the price of BTC to increase, depending on the demand from investors in the US market.
As Binance CEO Changpeng Zhao said on CNBC, the cryptocurrency market is still in a good position in terms of infrastructure and growth, and a catalyst will likely trigger an upward movement in the mid-term. “Sooner or later, something will trigger it,” CZ said.
Gabor Gurbacs, a digital asset strategist and director at VanEck, also emphasized the importance of the growth of the cryptocurrency market, adding that institutional investors are not fazed by whether BTC hits $3,000 or $10,000. As long as the infrastructure of the cryptocurrency market continues to grow at a rapid rate, he said the market will appeal to institutional investors.
“Large financial institutions are more focused on proper market structure than short term price fluctuations. How do we properly value digital assets? How do we custody digital assets? Are their ETFs available with proper market and investor protections? Most large institutions do not really care if Bitcoin ends 2019 at 3,000 or 10,000. I think market structure is getting better every day and crypto start to look more and more like the commodities and equities markets.”
As the cryptocurrency sector has done for the last nine years, if businesses and projects keep improving the infrastructure of the industry, both institutional and retail investors will likely begin to support the asset class once again.
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