Bitcoin has fallen behind a little as of late, with its price taking a dip from around $13,850 to $13,400. However, as of today, the currency is back up in the $13,700 range, and analysts and industry experts everywhere believe that more price bumps are headed our way in the coming days and weeks.
What Made Bitcoin Fall Back, Anyway?
A lot of individuals believe that the reason bitcoin fell back so badly is because there are many traders out there who sold their bitcoin stashes – either all or part – as soon as bitcoin reached $14,000 on October 31. The idea is that since bitcoin has earned a little bit more, they can cash in and make some short-term profits.
This is a problem in that doing this causes the price of bitcoin to suffer. Thus, long-term traders wind up losing out on what could potentially be even bigger games. They are thus forced to wait longer for the asset to return to form before they can take advantage of the asset and cash in.
Furthermore, bitcoin is designed to be held long-term anyway, so selling it early defeats the entire purpose. At the time of writing, bitcoin – despite being designed for payments – is more of a speculative coin, and speculative assets are typically held for longer periods so that users can rake in more earnings.
Constantin Kogan – managing director of Wave Financial Group – explained in a recent interview the process of “profit taking,” which he says is responsible for the pullback:
As the price rises to certain levels, in this case to $14K, there is a massive withdrawal of BTC from trading platforms.
Joe DiPasquale – CEO of crypto hedge fund manager Bit Bull Capital – is bullish in the long run but admits that profit taking has been taking precedence in the U.S. and abroad as of late. He comments:
Bitcoin’s move between $12,000 and $14,000 was not sustainable since the market hadn’t quite tested the support at $13,000 before attempting the next resistance. What followed was expected profit taking and bitcoin was bound to return to levels around $13,000.
Despite all this, many analysts believe that bitcoin is about to fly higher, and that the bulls have a prominent future in the world of crypto. Nicholas Pelecanos – head of trading at NEM Ventures – states:
BTCUSD is currently struggling to break the $14,000 mark. On the surface, this might just seem like a usual pullback from a psychological level, but historically, a break of the final resistance before the all-time high generally leads to the start of a more aggressive bull market.
Things Are Better Than They Look
Tim Enneking – managing director of Digital Capital Management – mentioned:
The fact that BTC broke through $14K after so long and that the drop thereafter was only about seven percent is actually a real show of strength.