Bitcoin Pullback Could Deepen, But Weakening Global Economy Could Bolster BTC
Bitcoin and the aggregated crypto markets have been spiraling downwards after bull’s attempt to bolster the markets yesterday faltered, leading to a continuation of the downwards pressure that BTC and other major cryptos have incurred over the past several weeks.
Now, analysts are noting that there is a high probability that Bitcoin’s recent pullback extends significantly lower, but that in the long-term BTC’s price may be bolstered by growing global economic weakness.
Bitcoin Dips Below $9,400 After Plummeting Overnight
At the time of writing, Bitcoin is trading down nearly 4% at its current price of $9,450, down significantly from its 24-hour highs of $10,200 that were set yesterday.
Yesterday’s price surge and subsequent drop formed what is commonly referred to as a “bart” pattern, where BTC forms a rapid leg up, trades sideways for an extended period of time, and then drops.
This move provided a significant amount of support for the bear case, as it signaled that buyers do not currently have enough power to provide Bitcoin with any type of sustainable price movement.
CryptoCohen, a popular cryptocurrency analyst on Twitter, noted in a recent tweet that the current pullback could extend significantly further, but that in the long-run Bitcoin is likely to be bolstered by growing economic instability.
“Could be a larger correction in play – could take a lot longer too – longer than many would expect/hope. But good things come to those who wait. When you look at low interest rates, and toppish equities, a long-term $BTC #bitcoin allocation for me is a no brainer,” he said.
Could be a larger correction in play – could take a lot longer too – longer than many would expect/hope. But good things come to those who wait. When you look at low interest rates, and toppish equities, a long-term $BTC #bitcoin allocation for me is a no brainer pic.twitter.com/E9IKNcbFcU
— CryptoCohen (CIM) (@Cryptocohen_) July 27, 2019
Global Economy Flashes Major Warning Signals
Over the past week, the global economy has flashed several warning signals that may tell investors that turmoil is imminent.
The ECB recently explained that the economy will require significant monetary stimulus in order for its current growth to be sustained, and that they may cut interest rates in the coming months.
Furthermore, the US GDP stagnated this past quarter dropping from 3.1% growth in Q1 2019 to 2.1% growth in Q2 of 2019.
Pomp, a popular cryptocurrency advocate and a partner at Morgan Creek Digital, spoke about this declining economic growth in a recent tweet, explaining that it could be “rocket fuel” for Bitcoin.
“HERE WE GO: US GDP last quarter: 3.1%. US GDP this quarter: 2.1%. Economy s l o w i n g down only means one thing — cutting rates and printing money! They don’t realize that they’re giving Bitcoin the rocket fuel it was built to consume,” he explained.
HERE WE GO.
US GDP last quarter: 3.1%
US GDP this quarter: 2.1%Economy s l o w i n g down only means one thing — cutting rates and printing money!
They don't realize that they're giving Bitcoin the rocket fuel it was built to consume.
Long Bitcoin, Short the Bankers!
— Pomp
(@APompliano) July 26, 2019
As both Bitcoin and the global economy continues to face increased instability, is highly likely that any major change in the current economy could lead to a paradigm shift that moves more people towards Bitcoin.
Featured image from Shutterstock.
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Cole Petersen, Khareem Sudlow