Bitcoin Reverts; Wall Street Pauses Bitcoin Dreams

In another week of ups and downs, the world’s leading cryptocurrency by market capitalization has reverted back to a level it reached a week ago, trading currently around $3,700. Despite an uptick in interest from traders, Bitcoin has failed to stabilize around $4,000, with current market signals indicating that traders are no longer feeling bullish and that the price may be dropping further.

Despite the downturn, a US venture capital firm focused on cryptocurrencies, Dragonfly Capital Partners, believes this correction to be a “milestone”–  one that confirmed the cryptocurrency will never fall down to zero, Forbes reports. According to the managing partner of the firm, Alexander Pack, Bitcoin may fall down to $1,000 or $2,000 in USD value but never back to $0.

The reasons, as he explains it, are not only because people now see the cryptocurrency as a dependable store of value but also the interest in the coin by institutional investors. Four years ago, cryptocurrencies were a niche market, Alex says, but now interest has been shown by the likes of Nasdaq and other trusted investors, making the demise of the coin an improbability. The real question, reportedly, is not whether this storm will end but only how long will the bearish trend continue.

Bears Return to the Scene

Despite hopes of seeing Bitcoin regain some of its former ground, the past week gave us the opposite. During this period, Bitcoin’s USD price fluctuated instead of stabilizing, reaching a peak of $4,262.48 on Monday morning, only to fall back to a low of $3,770.69 the following day. What’s interesting to note, though, is that the price increases were mirrored by a boost in trading volume which went so high at one point that it exceeded $9 billion. For comparison, this morning the volume is at a much lower $5.6 billion while the market capitalization is back to $67 billion.

As indicated by our technical analysis, the market is very bearish, with 7 out of 12 oscillators and 11 out of 12 moving averages being in the red on 5-hour charts and similar signals coming from the short-term charts. The SMA 100 has dropped below the SMA 200, indicating that the downward course is where the least resistance is. With no sign of bulls, Bitcoin could be headed for a test of the $3,620 support, which if broken could lead to a further drop. So keep your eyes on the market in the following days as nothing is certain right now.

Wall Street Shelves Its Bitcoin Ideas

As Bloomberg reported this weekend, Wall Street firms that were once preparing to enter the cryptocurrency futures market are now backing down after the brutal decline in prices we saw over the past year. As the online portal reported, names like Morgan Stanley, Barclays (London), Citigroup, and Goldman Sachs have postponed plans to launch services involving Bitcoin and other cryptocurrencies.

A few months back, Goldman Sachs was preparing to launch NDF (non-deliverable forwards) derivates as well as a trading desk, but according to the people involved in the matter, the bank has yet to establish a trading desk and has reportedly seen only 20 persons interested in the NDF.  Morgan Stanley likewise hasn’t traded a single contract while Barclays informed Bloomberg that they aren’t planning to launch a crypto-trading desk soon.

The reasons for the halt seem to be the latest price crashes but also the lack of regulatory guidance paired with a high number of criminal and other types of investigations into the cryptocurrency sector. How far will this pause continue, remains to be seen.

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