Bitcoin Plunges to $7,400: What Comes Next for the Market?
Wednesday was not kind to the cryptocurrency market. As of the time of writing this (Wednesday night), Bitcoin (BTC) has shed 8% in the past 24 hours, falling below $7,700 — a level which analysts said would “make or break” this bull market — in a precipitous drop. Bitcoin is currently holding just dozens of dollars above $7,400.
This move largely caught crypto traders with their pants down. As spotted by The Block’s Larry Cermak, this move saw at least $181 million worth of leveraged positions on BitMEX liquidated.
That being said, many traders and investors have been wondering what comes next for the Bitcoin market? The sentiment, as always, is mixed, but there seems to be a growing number of bears.
Bitcoin Analysts Foresee Further Pain
Trader Nunya Bizniz noted that Bitcoin’s pain has the potential to continue into the weeks and months ahead. In the analysis below, he noted that the measured “target” for Bitcoin’s descending triangle chart pattern is just below $5,000, which lines up with a level of historical support from earlier in this cycle.
The $5,000 target was obtained by measuring the height of the descending triangle — a bearish chart formation — and using the measurement as the potential height of the following breakdown.
BTC Daily:
Target for descending triangle's measured move is about $5K.
This aligns perfectly with prior support.
No way Jose? pic.twitter.com/30tng1o3ez
— Nunya Bizniz (@Pladizow) October 23, 2019
Some have even been more bearish. Prominent gold proponent Peter Schiff said in recent tweets that per his technical analysis, he is expecting for Bitcoin to fall to $2,000, maybe even as low as $1,000. His reasoning was similar to Bizniz’s, in that the gold investor used measured targets and then conveyed them to his Twitter followers.
Even permabulls are being cautious at the moment. In a comment given to Financial Review, Thomas Lee of Fundstrat Global Advisors — a prominent pro-cryptocurrency pundit that has long been bullish on these markets — said that he thinks that “we are in the midst of a consolidation, with potential downside risk near-term.”
He added that it may not be wise to scale into Bitcoin just yet, telling readers to “keep sufficient dry powder [ready],” before adding that a buy of Bitcoin below $7,000 would represent an attractive risk/reward play for Bitcoin investors.
Positive Fundamental Trend
While bears are in control of the price at the moment, the fundamental trend still seems to be decidedly positive. So positive, in fact, that industry analytics firm CoinMetrics.io recently registered that Bitcoin’s implied hash rate has hit a jaw-dropping number: 115 exahashes per second. According to the firm’s metrics, this is just high of the all-time high of around 117 exahashes per second, which they claim was established prior to this drop on Tuesday.
Despite today's price action, the implied #Bitcoin hash rate continues to reach all time highs, currently sitting at 115 exahashes per second! pic.twitter.com/cBpa9mvhGy
— CoinMetrics.io (@coinmetrics) October 23, 2019
Sure, 115 exahashes per second is a metric that may mean nothing in and of itself. But, consider that Bitcoin’s hash rate is now seven times higher than it was at the peak of 2017’s bull run, when BTC was trading for some $20,000. Crazy.
It isn’t only Bitcoin’s hash rate that is a strong fundamental trend.
Institutions continue to trickle into the industry, as made evident by Bakkt’s recent launch and the news that Fidelity is opening up its Bitcoin custody and trade execution facilities for qualified clients. Also, macro trends continue to skew in favor of decentralized money like Bitcoin, with there continuing to be negative interest rates, geopolitical unrest, a seeming capitulation economy and market, and widespread mistrust in centralized fiat systems.
Mike Novogratz, the co-founder of crypto merchant bank Galaxy Digital, is convinced that these strong fundamentals will allow Bitcoin to surmount new all-time highs within 18 months. More specifically, he told CNN last week that by early-2021, he expects for Bitcoin to have hit and surpassed $20,000.
Value versus Utility? “Gold has a 9 trillion USD mkt cap, yet you can fit all mined Gold in a 25 metre cube. It's valuable because we say it's valuable.” @novogratz argues $BTC is the same, but other #Cryptocurrencies will need to be "used" and that will take time $BTC #XRP pic.twitter.com/kwaniSsEqz
— Julia Chatterley (@jchatterleyCNN) October 11, 2019
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OhNoCryptocurrency via https://ift.tt/2PblI7a @Nick Chong, @Khareem Sudlow