What to expect after Bitcoin price stops nosediving
At one point on Wednesday, May 19, Bitcoin plunged 30% to near the $30,000 mark (a new low since February) before climbing back 8%. Altcoins suffered even bigger losses. Ethereum price crashed 46% on May 19 as it dipped from $3,441 to $1,850 (a day earlier, the 15% fall stopped at $2.9k). Just a day ago, Binance was trading at $432 — more than 37% below its all-time high of almost $700.
May 16 can be considered the starting point of active digital asset quotes’ decline. That Sunday, Elon Musk spoke against Bitcoin, and rumors surfaced on the web that Tesla plans to get rid of its Bitcoin stash. The very next day, Musk dismissed the Bitcoin sale information, but his statements didn’t improve the situation on the market and it remained unstable.
The final downslide occurred after the May 18 news release from China, where financial institutions were forbidden from providing any crypto-related services, with three financial regulators slash overseers of the respective sector releasing a joint statement.
All negative statements appeared more or less simultaneously, which can be seen as manipulation of the major players with the intent to make retail investors sell their cryptocurrencies to the whale traders at a bargain price.
Likely, the price drop below the line of $40k for Bitcoin and $3k for Ethereum will stimulate lots and lots of large purchases. Chances are high that Bitcoin will get back to the level above $40k, and Ethereum above the $3k mark next week, prompting some good news.
What we are observing at the moment is a bull run tied to last year’s halving (an event when the reward for mining Bitcoin transactions is cut in half). Drawing on the market retrospectives, we should expect another 4 to 5 months of a bull market.
Large funds are ready to hold their long-term positions open as long as Bitcoin trades above the $32,000 level. This could be considered as the current key mark for the market. As long as the Bitcoin price holds above $32k, the correction can be described as local.
Most likely, we are already nearing the minimum values of this correction and will observe a cessation of the drop shortly.
Potentially strong support for Bitcoin can be found at the $40k level, with the high probability of a rebound that can start at any point as soon as the bulk of market participants consider Bitcoin’s price appropriate for making a purchase.
This article represents FXOpen Markets Limited opinion only, it should not be construed as an offer, invitation or recommendation in respect to FXOpen Markets Limited products and services or as financial advice.