3 Reasons Why The Bitcoin Dip on Thursday Indicates a Drop to $7k
Bitcoin is a very interesting asset to follow. Seeing as you're reading this on Hive, I can imagine that you've followed the price of BTC to some degree in the past.
Many in the space and outside the space are watching the price of BTC relative to the U.S. stock market and other global markets. It is fascinating to see a new asset class arise and it is even more fascinating to sit courtside as we watch the various swings happen.
The latest sell off on Thursday coincided with a drop in the U.S. stock market, which is something we saw happen in March as well.
Risk-Off Global Environment
“A switch to ‘risk-off’ in global markets could lead to further downside pressure for major cryptocurrencies,” Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index funds, told CoinDesk."
Things don't happen in a vacuum. You have to remember that there are many institutions that now have exposure to BTC and when their stock positions are waning, they may dip into their BTC holdings to cover those positions.
A risk-off environment - when people are running to close positions and go to cash - is not good for Bitcoin in the short-term.
Whales Dumping BTC??
"Fears that so-called “whales” are preparing to dump large numbers of coins may have caused some bulls to exit the market. Further, savvy traders may have taken short positions in anticipation of the big dump, likely accentuating bearish pressures."
We've seen some large multi-million (and even some over $1B) transfers of BTC from previously inactive wallets. Many in the space are watching these wallets and wondering if there is an imminent dump - especially when a rally is happening in the price of BTC.
This one doesn't worry me much. It's a potential short-term hit to the BTC price, but I am convinced that even billions of $ worth of BTC dumped onto the market won't hurt the conviction of most bitcoiners.
The Technicals
"Thursday’s price decline has only strengthened the case for a deeper pullback. The slide to $9,100 marked a downside break of the eight-day restricted trading range of $9,350–$10,000."
Obviously, there are thousands upon thousands of traders in BTC and they are all watching many of the same technical indicators.
“This week the level is around $9,000-$9,100, hence [we’re] likely to see good buying here, then $8,700 & $8,200, otherwise, the next downside zone is $6,500-$7,000.”
Many in the space continue to call upon these levels as being downtrend indicators. We've seen many calls that BTC is due for a major pullback to the $6500-$7k level and I wouldn't be surprised if we dipped down there for a little while.
While I gave 3 reasons here, the 2 main things I am looking for as try and time a dip in BTC are:
- What are the global equity markets doing?
- What are the technicals saying and how is the BTC market sentiment reading them?
Posted Using LeoFinance
