For the last several weeks, bitcoin appears to be hovering between the mid-$9,000 and $10K ranges. According to Simon Peters – an analyst with the cryptocurrency exchange and broker e-Toro – things are about to get rather ugly for the world’s number one cryptocurrency by market cap.
Simon Peters: Bitcoin Could Strike New Lows
Peters explains that the asset is about to undergo a serious correction that could bring it to new lows in the coming weeks. In an interview, he states:
The recent crypto asset pullback coincides with a similar retraction in global equity markets. It appears the narrative in markets has somewhat changed from potential recovery and the reopening of economies post-lockdown to a potential second COVID-19 wave, especially after several US states have reported a spike in coronavirus cases since reopening their local economies. Optimism has dissipated, and realism has set in, in both the crypto asset market and global stock markets. If we begin to see widespread second spikes of COVID-19, then that would probably cause another selloff across all markets. If the price drops below the $8,500 level, investors should be worried.
Peters is basically warning us that the behavior surrounding bitcoin and other speculative assets in March could return now that economies are beginning to open back up. Several states in the USA have announced that restaurants, bars, and other locations will open normally to the public, and yet some of these areas are already beginning to announce jumps in new COVID cases. The governor of Oregon, for example, is already looking to reinstate the stay-at-home order on account of these new cases.
Should things get bad again, bitcoin and other assets are at risk of dropping and losing value, just like they did during March. Peters warns that unless the virus is fully stopped, investors will always be in a place of not knowing, and their money will continually be at risk.
New Coronavirus Cases Are the Problem
He did, however, explain that bitcoin is still in a good place for the time being, and that problems would only strike if further coronavirus spikes were heavy in size and scope. He mentioned:
With bitcoin, there is always the possibility for a further drop, but it’s my view that we are seeing a new bottom begin to form. Fundamentals remain positive for the asset, especially given the recent Fed meeting and indication of continued economic stimulus and consistently close-to-zero rates.
At the time of writing, bitcoin is trading for just over $9,400, meaning that while it’s gained a bit since the recent drop from 48 hours ago, the currency is still low when compared to where it was at the beginning of the week. However, this appears to be a recurring pattern for bitcoin since the end of May, so perhaps there isn’t much to worry about just yet.