Bitcoin suffered from one big correction and could have others. Bexplus offers you the opportunity to benefit from the ups and downs.
The price of Bitcoin has plummeted in the last few hours. After briefly touching $19,500, just a small step from its record, Bitcoin crashed to $16,350, a decrease of about 15%. Also, Bitcoin’s sudden correction wiped out long positions worth nearly $2 bullion-worth in three major crypto exchanges.
In fact, the overheated market cooled down quickly after it collapsed. The Bitcoin traders‘ fear & greed index stood at 93 yesterday, now it’s down to 86.
The crypto market saw it coming, and now what?
Last week, several analysts warned about the possibility of significant corrections for Bitcoin when the market was up.
There are two main reasons for the drop. The first is the selling pressure of $19,000, as the whales considered it a good place to make a profit.
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What caused the correction?
The second is the excess of leveraged positions in the main crypto exchanges. In recent weeks, the funding rate for holding long positions has been exceptionally high, with a multi-month high of 0.098%, indicating that the market was overleveraged and buyers were facing increasing pressure to maintain their long positions.
In addition, unfavorable news is worrying some investors. It is rumored that U.S. Treasury Secretary Steven Mnuchin plans to introduce stricter rules for private wallets, requiring users to go through the KYC process.
Ray Dalio, founder and co-chairman of Bridgewater Associates, expressed concern about the limited number of Bitcoin users and the continued volatility. He also commented that the government may one day ban it.
While the market has cooled somewhat, many remain positive that the largest crypt currency by market value could touch $20K in the coming months, or even weeks. In fact, analysts argue that investors continue to buy bitcoins to protect against inflation, while the 2017 rally was initiated by retail investors.
Joel Kruger, currency strategist at LMAX Exchange, shares his views: „We don’t think the Bitcoin reversal is a reflection of any worrying fundamentals?we see the move as a long overdue correction after an explosive run.
Before reaching $20K, there are still some obstacles that Bitcoin must cross. According to Philip Swift, the creator of Lookintobitcoin.com, the Golden Ratio Multiplier indicator indicates that $16,000 and $13,000 are the key support levels. If Bitcoin doesn’t break cleanly out of $16K, it could revisit $13K and start the whole climb again.