Is Bitcoin crashing?
Is the Bitcoin cryptocurrency crashing? A question that seemed to be on everyone’s mind on the 17th of January.
The main cryptocurrency Bitcoin lost 30+% of its value in two days while finally finding support at 9500 USD. Following all alternative coins were also experiencing a bear market.
But what caused this meltdown and is this a price correction or a change in the market sentiment?
The selloff was caused by a number of recent news that made investors to cash in on their profit.
First we had the vice president of JP Morgan, Mike Bell who stated that government “could” ban cryptocurrencies. A statement that understandably made leveraged investors to take profit and short term traders who were “shorting” positions in order to exploit the short term sentiment for an easy profit.
This made the price to dip down to a support at 11 000 USD.
However, another confusing statement from South Korea regarding a proposal for “stricter regulations” to the cryptocurrency market and exchanges. Something that was then rebuked and confirmed a few times afterwards. The words “shut down of exchanges” were also mentioned.
As economists state “uncertainty is the greatest evil of all” a lot of the market participants saw that as a negative sign and continued with the short term selloff for Bitcoin.
The price finally found support at 9 500 USD at which point buyers came into the market and we saw a pullback.
So what does this mean?
In our opinion and based on our analysis the overall market sentiment has not changed. We still have a long term bull market for Bitcoin. The recent dip in the price and short term selloff was an opportunity for buyers to get into the market at a better price. Also allowing them for a better risk management profile with tighter Stop loss on their positions.
Furthermore, as it is with cloud mining a lot of investors actually “produce” the asset. These are not speculators and this is important to note.