Bitcoin Drops to $7,400, Further Drop to $6,900 Likely; Cryptocurrency Market Suffers


Get exclusive analysis and cryptocurrency insights on Hacked.com for just $39 per month.

On yesterday’s report, CCN noted that the $7,700 mark is an important support level for bitcoin and if BTC fails to secure momentum above $7,700, a short-term decline to the $6,000 region is likely. Today, on June 5, bitcoin fell to $7,400, increasing the probability of a further drop to $6,900.

End of Another Corrective Rally

The failure to recover back to $7,700 speedily in the next 12 to 24 hours would signify the end of BTC’s most recent corrective rally. On April 12, BTC’s corrective rally extended from $6,900 to $9,900, but it ultimately came to an end after BTC failed to test the $10,000 support level.

Throughout April, the BTC price fell sharply from $11,700 to $6,900, leading investors to panic. The swift corrective rally of BTC from $6,900 to $9,900 convinced investors that the next bull rally of bitcoin is imminent. However, the low volume of BTC and the strong hand of bears disallowed bulls to take over the market, initiating yet another correction.

If BTC falls below the $7,200 mark in the next 24 hours, a drop to the $6,000 region is inevitable. If BTC falls to the higher end of the $6,000 region, a sudden surge in volume triggered by a corrective rally is a possible situation, similar to the rally of BTC on April 12. If BTC falls to the lower end of $6,000 by slowly bleeding out from the higher end of $6,900, it may result in BTC initiating a mid-term recovery throughout June, without a short-term bounce.

It is also possible for BTC to bounce strongly at $6,530, a region where the last corrective rally on April 12 was triggered. In early April, there were some notable spikes in volume that led investors to be optimistic about the short-term trend of BTC. As of recent, the volume of BTC has been substantially low, decreasing the probability of a short-term bounce back to the $8,000 region.

What is Causing the Bleed Out?

BTC is suffering from an intense downward trend and a sell-off from medium-sized investors and holders. The sell-off of investors is not being met with an increase in demand from both small and large-scale investors, as seen in the daily trading volume.

But, the cryptocurrency market is extremely volatile and the entrance of a few large-scale investors could sway the market, especially in a period like this wherein the volume of BTC remains quite low.

Ari Paul, the co-founder of Blocktower, a prominent cryptocurrency hedge fund founded by Paul along with Goldman Sachs executives, stated that institutional investors can only enter the market once proper custodian solutions are available.

“[Emergence of reliable custodian solutions] that will allow institutional inflows to start accelerating. Once a couple big traditional money managers announce that they’re including BTC as ‘digital gold’ in their portfolios, others will follow. Again, not instantly, but I think fairly quickly,” said Paul.

Until then, which could be three to six months from now, it is unlikely that the cryptocurrency market returns to the $500 billion region and BTC recovers to its previous all-time high.

It is also important to prevent recency bias from affecting trading calls. A drop to $6,900 for BTC could lead investors to panic, but a quick bounce as seen in on April 12, could lead BTC back to $8,000 in an instant.

Featured image from Shutterstock.

Follow us on Telegram.
Advertisement



Source link

Spread the love

Related posts

Leave a Comment