The price of Bitcoin plunged about 20% last week, going from a price of just over $10,000 to $8,000. Anytime an investor loses 20% it is extremely concerning and Bitcoin investors are getting nervous. What is easily forgotten is that the price of Bitcoin is actually up about 200% this year. It wasn’t that long ago that the price of Bitcoin was under $4,000. That is not much comfort to investors, as it is all about what is happening now, and people are worried about the Bitcoin price.
Why did the Price Fall?
No one really knows why the Bitcoin price plunged last week but there are plenty of theories. Some analysts believe the Bitcoin price simply dropped because of the fundamentals. “Bitcoin has been due a price break for some time," said Simon Peters, analyst at eToro, to the media, "Since reaching $14k back in June, the cryptoasset has been making 'lower highs' and 'higher lows', forming a 'symmetrical triangle' chart pattern converging towards an apex. Generally, this pattern precedes a breakout either higher or lower, and this is what we saw yesterday."
Peters also said that the underwhelming launch of Bakkt, a new cryptocurrency platform, could have contributed. “Pessimism over the level of activity on Bakkt sparked this most recent sell-off. However, it was the liquidation of $600 million worth of long positions on platforms like Bitmex that caused the price to dramatically slump by over a $1,000 in a 30 minute period."
Peters went on to say that the recent price drop could be a good chance for investors to buy. “Nevertheless, now that Bitcoin is now trading below $8,500, it could become an attractive proposition for investors who want to buy the dip. Fundamentals such as hashrate remains strong, and adoption of crypto is still moving forward at pace. With those conditions in mind, we could see the price rise back up to $10,000 within the space of the next month.”
Peters is optimistic about the Bitcoin price going forward, and he is not the only one. One cryptocurrency analyst said that the Bitcoin price could easily fall another 25%, but that same analyst also believes that once the price bottoms out that Bitcoin could surge to $20,000.
Joe DiPasquale, the chief executive of BitBull Capital, said that it may not take long for Bitcoin to surge back over $10,000. He said to CNBC that a “price (recovery) to $10,000 (can happen) in the coming days”.
What Will Investors Do?
The question that has to be answered is what will investors do after this latest Bitcoin price plunge? If history is any guide, then we know that the Bitcoin price is going to dramatically move again. What has to be answered is which way will the price go? If we go back to what Peters said, it could be that the Bitcoin price drops further and then surges back and hits a yearly high. If he is right, then investors should wait until Bitcoin goes down further, perhaps into the $6,000 range and then buy. Whether that happens or not should be determined in the next couple of weeks.
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