5 reasons why Bitcoin and other Cryptocurrencies are going down.
The sharp selloff in Bitcoin this week is stoking fresh questions about the sustainability of the cryptocurrency boom.
In the last few weeks, bitcoin has been on a wild ride, surging to record highs and then wiping hundreds of billions of dollars from the cryptocurrency market days later.
The price of bitcoin is tanking nearly 10% Thursday, tacking on to massive losses as bearish calls from regulators and analysts heighten after a huge surge fueled by still-booming institutional adoption.
(1) All-Time High
Resistance disappears when a coin hits an all-time high but hidden obstacles remain, ready to surprise unwary longs with reversals and shakeouts. While the breakout completes the digestion of prior supply, the security undergoes additional testing that can last weeks or months. This process has the power to trigger sizable losses that can be avoided with the first special rule, which categorizes the uptrend positioning in relation to the breakout.
Is that a bubble? Quite possibly. check this out
(2) Fear, Uncertainty, and Doubt
This happens from time to time when Bitcoin receives very negative press and this can cause mass panic and increase the selling pressure as people lose faith in Bitcoin.
Keep in mind that more often than not the media is looking to make headlines and generate interest rather than conduct extensive detailed research. So don’t rush to sell the moment you hear Bitcoin is dead yet again. you can learn what panic will do to the price of bitcoin here
(3) Dumping Coins on the Market
As a general rule, whenever a large amount of Bitcoins is being sold on the market, it will drag Bitcoin’s price down since the sell pressure increases.
For example, in certain cases, the FBI or different authorities seize substantial amounts of Bitcoin from illegal operations. When this happens, they usually auction off these Bitcoins to the public.
Since authorities aren’t geared towards maximizing profit and a usually large amount of Bitcoin are being auctioned, they are normally sold below the market price. This, in turn, causes Bitcoin’s price to drop, as the auction winner usually sells some of his newly acquired coins on exchanges as well.
(4) SEC regulations
We are seeing the crypto market head south largely due to regulatory uncertainty. The SEC is increasingly regulating crypto.
In December, the SEC charged Ripple Labs (the firm behind XRP, the world’s third-largest token at the time) and two of its executives with conducting an unauthorized securities offering. In its complaint, the SEC alleged XRP is a security and therefore subject to the agency’s regulatory purview. XRP prices are down more than 60% since then. Meanwhile, an SEC director declared in 2018 that ether was not a security, but he stopped short of making that declaration permanent.
To date, the SEC has denied nine Bitcoin ETFs (Exchange Traded Funds) and delayed reviewing a tenth. This has had a negative effect on the crypto market. Legalizing cryptocurrency ETFs would allow institutions and individuals to invest in cryptocurrency without buying coins or tokens. By mitigating risk in this way, ETFs would mean large scale investment and more stability.
Find out all about the xrp lawsuit and the impact on the crypto market here
(5) Security concerns for prospective investors.
The crypto market has received a lot of bad press for hacks, exit scams and Ponzi schemes. For some, ICOs are synonymous with fraud, though this is far from the truth.
However, cryptocurrency exchange security remains a glaring issue The fact is that $1.1 billion in cryptocurrency was hacked in 2018. In the previous year, cryptocurrency hacks rose 369 percent.
This is because stealing funds from exchanges, rather than banks, is a lot easier to do. Exchanges can be small companies with inadequate security to control millions in digital assets. Though there are many secure options, exchanges are not to be trusted across the board.
I like you analysis but it has one serious flaw in it considering how bitcoin behaved in the past.
If you look at overall bitcoin chart on log scale, you see that this particular correction is a typical correction after breaking previous 3 year ATH. So, your chart applies to june 2017 (and not december 2017), same with april 2013 (and not december 2013). In both case bitcoin recovered super fast, and rise the uptrend to even more parabollic.
It doesn't mean it's not gowing lower, but it does mean, it's probably not the safest bet. It could resume uptrend really fast. That's for the technical analysis of price cycle through history.
Concerning your fundamental analysis, it seems you have a bias toward bad news. There's a huge amount of very good news you are not considering.
Concerning sentimental analysis. Crypto greed and feer index touch a lower on alternative.me indicator yesterday at 40. (like october 2020) now it's grinding is way back to a greedier level, so there's a lot more room for greed (as shown in the past and the famous +1xxx% increase in price on each cycle)
abel11
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@Grounded, thank you for checking the idea out. please how long do you think it will take bitcoin to recover from this drop?
Grounded
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@abel11, thanks for answering and asking that question.
I have 2 scenario.
1) drop is over, next week retest of 40k/ATH.
2) drop takes a month to recover with another dip along the way. This would be ideal scenario for alts.
abel11
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@Grounded, drop is over? i really don't think so. i think the accumulation will continue for a few months.
Grounded
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@abel11, well drop was indeed over. This is what I don't like in your charts, you are not cautious enough and you sound too confident. Maybe this is good to get attention and like. But in trading you should never be the one confident in your short against the crowd of bulls, price action is just a reflection of the people mindset. People buy bitcoin.
abel11
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you spoke of me having bias toward the bad news, that's because it is the one having much impact on the price now. @Grounded,
If you look at overall bitcoin chart on log scale, you see that this particular correction is a typical correction after breaking previous 3 year ATH. So, your chart applies to june 2017 (and not december 2017), same with april 2013 (and not december 2013). In both case bitcoin recovered super fast, and rise the uptrend to even more parabollic.
It doesn't mean it's not gowing lower, but it does mean, it's probably not the safest bet. It could resume uptrend really fast. That's for the technical analysis of price cycle through history.
Concerning your fundamental analysis, it seems you have a bias toward bad news. There's a huge amount of very good news you are not considering.
Concerning sentimental analysis. Crypto greed and feer index touch a lower on alternative.me indicator yesterday at 40. (like october 2020) now it's grinding is way back to a greedier level, so there's a lot more room for greed (as shown in the past and the famous +1xxx% increase in price on each cycle)