Genesis Trading CEO Michael Moro has predicted that bitcoin will bottom out at about $3,000 after a week that has seen the leading cryptocurrency fall as low as $4,035. Speaking to CNBC, Moro stated that he does not expect the $4,000 support level to hold out much longer as selling pressure from pre-2017 bitcoin investors liquidating their holdings will continue to drive the price downward.
Not The End of the Road for Bitcoin
Responding to a question about how bad the current market rout could get, Moro stated that while the situation certainly does not favour day traders and casual investors looking to “make a quick buck,” this is not uncharted territory for bitcoin. He noted that bitcoin had experienced 75 percent or greater drawdowns on five occasions over its ten-year history. CCN reported earlier that bitcoin’s 79 percent pullback from its all-time high 11 months ago is actually the smallest of its five largest price corrections to date.
In Moro’s opinion, institutional investors looking at bitcoin through this lens will not care too much about where bitcoin ends 2018 because they are more interested in its movement over three to five years. He also noted that the $6,000 cost of mining 1 BTC, which has previously been used as a price floor, will drop as the Bitcoin network’s hash rate drops in the face of sustained sub-$6,000 prices. To this end, he said, the largest miners are willing to continue mining at a loss until the difficulty adjustment takes place on the Bitcoin blockchain.
$3,000 is the Next Critical Support Level
When pressed for his price floor prediction for the cryptocurrency market lodestar, he said:
“It’s really difficult. There are small levels of resistance, and we’ve seen the 4000 level get tested twice now in the last couple days, but I really don’t think there’s too much in the mid 3000s, so you won’t find much until you hit the 3k flat level.”
Explaining why bitcoin is under such immense selling pressure at the moment, Moro said that based on his experience at Genesis, investors who got into the market just before or during the bull run typically liquidated their holdings earlier in 2018 either to cut their losses or take some gains, but the older investors who bought bitcoin in 2016 have now started to liquidate and take their gains.
Moro also expressed his belief that this is by no means a terminal decline for bitcoin, explaining to the panel that while bitcoin’s trading volumes are about 60 percent lower than the 2017 bull run, they are still “multiples higher” than at the start of 2017. As a result, he said, it is helpful to examine bitcoin in the context of a longer time frame.
Featured Image from Shutterstock. Charts from TradingView.
