Is Bitcoin About to Drop Further?
The weekend marks the Lunar New Year in China, and celebrations are likely to occur amongst the nation’s people. Typically, this marks a period of heavy bitcoin and cryptocurrency use amongst people returning home for the holiday, but this year is a little different.
China has been marred by a coronavirus outbreak for the past several days. Allegedly passed on from snakes, the virus has taken the lives of more than 20 people and has caused several cities to fall under quarantine. Many believe that this virus will lessen the number of celebrations allegedly poised for this weekend, and if that occurs, bitcoin will not get the reception it usually does this time of year.
If usage falters amongst Chinese residents, many believe the coin’s price is set to fall. On Twitter, Arthur Hayes – chief executive of popular cryptocurrency Bitmex based in Seychelles – wrote:
The year of the rat starts this weekend. Time for bitcoin volatility and volumes to nosedive.
One could easily argue that the volatility has already started. Bitcoin has shed nearly $300 from its price at the time of writing. The currency was trading near the $8,700 line during the first half of this week, only to come crashing down to a measly $8,400 about 48 hours ago.
While this number isn’t particularly low, it marks a negative point in what could have easily been labeled the heaviest bull run the cryptocurrency has seen since last November. During that time, the asset had crossed the $9,000 line following a drop of nearly $2,500.
Some analysts, however, don’t think the weekend will have any serious repercussions for bitcoin, and that things are likely to remain the same.
Writing on social media, bitcoin commentator and economist Alex Kruger doesn’t think the celebrations are likely to fall because of health concerns, and thus bitcoin will probably enjoy the same reception it always receives this time of year. He states:
Some think the Chinese New Year may impact bitcoin negatively, as people sell bitcoin to purchase presents. Data indicates bitcoin does not underperform preceding the Chinese New Year.
If that’s true, though, then how does one explain the sudden drop in the cryptocurrency’s price? Is it just coincidence, or is something not being accounted for in Kruger’s analysis?
Trouble Brewing Ahead
A separate report also discusses that bitcoin has what’s known as a “death cross” in its sights, and that the currency should shed as much as 83 percent off its price in the coming weeks. This would potentially bring one unit of BTC down to about $2,300.
Either way, the world’s number one cryptocurrency by market cap has entered a period of seemly instability, which has traders worried about the immediate future.