The cryptocurrency markets have shown an unprecedented level of weakness amidst its latest drop, with most altcoins trading down 90% or more from their highs, and Bitcoin falling to levels not seen since early 2017.
There is now a consensus amongst industry analysts that Bitcoin has to fall even further in order for it to establish a bottom.
Bitcoin’s plunge to its current price of $4,270 first began in late-October and into early-November when it failed to stabilize above $6,500, which sparked a gradual decline. Bitcoin’s price began to fall sharply on November 13th, when it fell from $6,350 to $5,700, before continuing to fall to its current price.
Following this unprecedented drop, analysts have readjusted their pricing targets and now agree that Bitcoin must drop even further in order for it to establish a bottom.
While speaking on CNBC’s Squawk on the Street, Michael Moro, the trading chief at Genesis Trading and Genesis Capital, said that Bitcoin’s bottom may not be seen until it reaches the $3,000 level.
“You really won’t find [the floor] until you kind of hit the 3K-flat level. It’s really difficult. There are small levels of resistance. We’ve seen the 4,000 level get tested twice now in the last couple of days, but I really don’t think there’s too much in the mid-3s,” he explained.
Moro further added that investors shouldn’t buy the dip unless they are truly committed to the long-term success of Bitcoin, as there could be a significant amount of turbulence between now and a point where it reaches new highs.
Analysts Agree That Bitcoin Has Further Room to Fall
Other analysts in the cryptocurrency industry more or less concur with Moro’s assessment regarding further losses for the cryptocurrency markets, with Naeem Aslam, the chief market analyst at Think Markets U.K., explaining that he believes $3,500 may be the level where BTC bottoms.
“Bitcoin is likely to move even lower after a failed attempt to break above the $4,700 level. The regulatory environment is suffocating the bulls and the bears are going wild. It is likely that the price may touch the level of $3,800 or even $3,500 if the current momentum continues,” Aslam explained.
Recently, Jani Ziedens, an analyst at CrackedMarkets, told MarketWatch that buying pressure currently exists in the $3,500 region, which may cause a short-term bounce if the level is reached.
“Look for the selling to continue over the next few days, but a bounce off of $3.5k-ish that returns to $5k is likely. While that doesn’t sound like a lot given the latest tumble, a bounce from $3.5k to $5k is a nearly 50% payout for just a few days of work. This is not for the faint of heart, but there will be nice rewards for those willing to jump aboard the inevitable bounce,” he said.
Institutional Interest in Bitcoin and Crypto May Help the Markets
Although the persisting bear market has brought investor’s sentiment to yearly lows, increasing institutional interest in the markets could reverse the downward trend and help propel the markets back to all-time-highs.
Bakkt, the ICE-backed cryptocurrency platform that caters to institutional and corporate investors, will be launching their Bitcoin product on January 24th, 2019, which could have an overwhelmingly positive impact on the markets.
Fidelity Investments, one of the world’s largest traditional brokerage firm, will also be launching an institutional-aimed cryptocurrency investment platform that could help bring an influx of institutional funding into the cryptocurrency markets.
While speaking to CNBC, Moro also importantly noted that day-to-day pricing action is mainly noise, and that institutional investors likely don’t care about how Bitcoin ends 2018.
“This is about the fifth or sixth 75 percent-plus drawdown that we’ve seen in the 10-year history of bitcoin. And so if you have that [long-term] lens, I don’t believe institutional investors really ultimately care where the price of bitcoin ends in 2018 simply because they’re looking at things three to five years out,” he said.
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