Bitcoin is falling fast: when to expect a recovery
17.05.2021 | auglovoi
Over the past seven days, bitcoin has lost a quarter of its price. Many attribute this to the decrease in the share of large holders of the first cryptocurrency and comments of Elon Musk about Tesla’s cryptocurrency. However, we should not forget that over the past six months, digital gold has shown unprecedented growth, in general prices on online exchanges have doubled. The current decline can be called a necessary correction.
If you look at the chart, you can see that the past correction ended up rising into a fundamentally defensible corridor above $55 000. At present, a price around $50 000 per digital gold coin can be considered fair. This is justified by the arrival of big water at Chinese hydroelectric power plants, increased daylight hours in regions with developed “green” mining, which makes cryptocurrency mining cheaper for miners.
At the moment, bitcoin can still fall by a couple of thousand, but expect in the next month rollback below $ 40 000 is clearly not worth it. It is possible to play short from the current prices to the level of $41 000, putting a stop at the price of $48 500. The probability that the first cryptocurrency has not yet reached the local bottom remains. The price is now being shaped by retail investors who are influenced by media personalities, and the news background from them is not the most favorable.
The fact that big players are not currently exerting strong pressure on the market is also indicated by the fact that the sale last quarter of some investments in cryptocurrency by Elon Musk has not collapsed the market. If there had been no need to report to the Securities and Exchange Commission, perhaps these actions would have gone unnoticed. Judging by the billionaire’s messages in his Twitter, it is possible that Tesla has already closed all positions in digital gold.
The forecast of major investment companies for the end of the year, where the price of the first cryptocurrency is indicated above $100 000 per coin, is still relevant. There are fewer and fewer new coins being mined, and demand will continue to rise, which will continue to support bullish sentiment in the cryptocurrency market in the long term. We should not forget about the plans of the world’s largest economies to support their population by easing monetary policy and injecting newly printed funds. Already now we can see unprecedented growth in inflation in the United States, and the Federal Reserve is in no hurry to significantly raise the benchmark interest rate, which makes investors look for assets that can help hedge asset depreciation risks.
These articles are for informational purposes, are not investment guidance and make no guarantees.