Bitcoin has been having a hard week. Following a meteoric rise to $12,000 that lasted what felt like five seconds, the currency dropped deep into bearish territory, slipping initially into the low $11,000 range. From there, the currency was trading for about $10,800, while today, another $500 drop has occurred, bringing BTC down to about $10,300.
Bitcoin Is Slip, Sliding Away
Overall, bitcoin has lost close to $2,000 in just the past few days alone, and many analysts now say that the world’s number one cryptocurrency by market cap is at a critical level. They warn that if bitcoin happens to fall below $10,000, the asset could potentially enter a bearish whirlwind that it may never leave… At least not for a long time.
Joe DiPasquale – manager of Bit Bull Capital – explained in a recent interview that should BTC fall below $10K, the bullish conditions it’s been facing could vanish completely for the rest of the year. He stated:
Moving forward, it is important to keep an eye on the last zone of defense between $10,000 and $10,500. So long as this range is respected, bitcoin is unlikely to see a prolonged bearish spell.
There is some good news in that the recent bitcoin price drops may have been caused by an open trading gap of bitcoin futures via CME Group in Chicago. Typically, open trading gaps like this tend to bring the asset’s price back a few steps, though roughly 90 percent of the time, the currency in question manages to regain its previous strength and reenter bullish territory.
While this is relatively common, it’s hard to predict if the present circumstances will have a similar ending. Philip Gradwell – chief economist at Chainalysis – commented that buying and selling activity of bitcoin has taken a bit of a stumble during these past few days. He mentioned:
Bitcoin inflows to exchanges were 92,000 yesterday, the highest in 37 days as people rushed to sell at near $12,000 prices on September 1. Trade intensity, how many times the inflowing bitcoin was traded, is low, suggesting there were not many buyers to match the sellers.
What Happens if the Currency Loses Its Five-Figure Status?
Mati Greenspan – a former analyst at e-Toro and the founder of Quantum Economics – states that bitcoin miners, as of late, have been moving large amounts of digital money, which may have negatively affected the price. He also stated that the U.S. dollar is making a solid comeback, saying:
The big level that everyone is watching is $10,000. The crypto market has broken a few psychological levels. When we broke above that level in late July, it was with such force that we never really got to test it as support. Well, this may just be our chance. If things get bad, we may just get another chance to buy bitcoin below $10,000.