Bitcoin continued its bearish cycle for the most part of last week as the cryptocurrency slid off by over $400 in the course of seven days. Since Monday, the coin has been stabilizing and trying to hold on to a new support level, trading mostly between $3,400 and $3,500. The current market signals suggest that the consolidation will continue, although no one can be certain for how long.
According to Bloomberg, Bitcoin’s latest price movement is the sign of another BTC bubble popping and it’s not the only bubble the coin has burst so far. In an article in the Bloomberg Opinion segment, writer Noah Smith compares Bitcoin’s recent price burst to other famous financial bubbles and previous cases when the cryptocurrency went through just as “devastating” price corrections.
So far, Bitcoin has experienced a number of severe price drops, although none were as costly to investors as the latest one, especially if they only arrived to the market around December 2017. Thus, the moral of Smith’s story is that it is a fact of life that financial bubbles happen and it’s your responsibility to protect yourself from them. In short, you should never be sure of a certain asset’s performance but also never invest all you have into one single asset.
Bitcoin’s Trading Market Undecided
Over the last seven days since our previous update, Bitcoin has began to stabilize around a new price range, showing less drastic movements like in the previous weeks. The highest price point during this period was reached on Thursday morning, when Bitcoin touched $3,862.69, while the lowest value was reached the next day, on Friday evening, when Bitcoin hit $3,295.11.
The market charts show that interest in trading the coin has stayed healthy throughout the week as the 24-hour trading volume circled mostly around $6 billion. At present, the trading volume is at $4.7 billion while the market cap is at a low $60.2 billion.
One important observation we can make is that the trading market has been changing directions quickly over the past hours, not showing any clear direction. Currently, our market signals show a bullish mood, with 7 out of 12 moving averages and 6 out of 12 oscillators sending a “buy” signal. However, RSI and Williams %R are also signaling overbought conditions, suggesting that bulls may be getting tired. With the signals changing quickly, it’s difficult to pinpoint Bitcoin’s next price direction, so a close watch on the market is advised. If Bitcoin’s uptrend support doesn’t hold, $3,200-3,000 will likely be the next target.
Will there be a New Price Drop?
In a new segment on Bitcoin, Forbes contributor Clem Chambers predicts a new price drop for the coin. As he explains, when crashing, Bitcoin – just like all asset instruments – goes down in stages becasue that’s just the nature of the trading market. With his own experience, Chambers believes that Bitcoin’s price charts show signs that a new crash might be coming – one that will take the coin down to $2,500.
As other markets have shown, when a price crash for a certain asset appears, the next stage would be for the price to stabilize. And once it does, the asset will usually reprice at a new level. With the cryptocurrency’s volatility exploding at the present level, Bitcoin’s market is showing signs of uncertainty and an overall bearish trading mood. This leads Chambers to conclude that a new break may be coming, and if it does, it is very likely to lead to a sizable push further downwards towards the bottom of the bearish market.