Although steady at the moment, Bitcoin’s price continues to be a massive rollercoaster. After spiking over $10,000 on June 1 amidst the riots in the USA, it fell sharply a day later. The leading cryptocurrency dropped $800 in around 5 minutes before consolidating around the $9,500 mark. This pushed the cryptocurrency market in the red, although experts are not afraid of long-lasting repercussions.
The fact remains that Bitcoin is doing pretty great during the coronavirus pandemic while the oil price crashes. Of course, such sharp drops are not ideal for Bitcoin as the cryptocurrency has struggled to maintain a strong base over $10K after the halving.
The Drop May Have Been the Result of Standard Trading Activities
The riots in the USA currently taking place have had an instant impact on Bitcoin’s price. Everything was going great on June 1 when the leading cryptocurrency surged over $10K. However, it fell sharply later with a huge drop in just 5 minutes.
Bitcoin’s $800 drop might have been nothing more than a result of standard trading activities. At least OKCoin’s head of market development thinks so. Matthew Ficke says that this kind of activity lures short-term traders to position for higher breakouts, meaning it could very well be a one-time instance.
Ficke also sees the $10,400 zone as a historically important zone. Bitcoin went to it 3 times since fall 2019 but has been unable to break past it. The latest price drop means simply that Bitcoin pumped and dumped. As Ficke says, unless momentum carries the market higher, the long positions of short-term traders will become vulnerable and harm the short-term price volatility.
Bitcoin’s yesterday massive drop has sent the market in the red zone. Litecoin and Ethereum have seen daily drops of 5% and over, with Bitcoin Cash, XPR, and Bitcoin SV also flashing red. On the other hand, traditional markets are seeing mixed action. With the European Union announcing plans for coronavirus stimulus packages for the economy, European shares are already picking strong bids.
The Retreat Shouldn’t Deter Investors
Even after the sharp price drop, investors are unlikely to be deterred. Many believe in Bitcoin’s long-term potential and value, and changing laws from around the world can make it a financial tour de force in the future. In simple terms, times are changing and Bitcoin and cryptos are getting more and more relevant.
Some Chinese courts have recently ruled Bitcoin and Ethereum legal properties. Other countries around the world are also starting to recognize the potential of cryptocurrencies. The unstable price of traditional markets during the COVID-19 pandemic has made people think in the other direction, putting Bitcoin and cryptos in the spotlight.
The latest price drop means nothing for investors. Latest research showed that around 60% of Bitcoin supply has not changed hands in a year. This means that investors are holding on to their Bitcoins expecting major gains. If that’s the truth, the price could soon race over $10,000 and finally stay over it.