The last time the #volatility of Bitcoin recorded a free fall was in November. Following a stable few weeks, the price of BTC went on to plunge from $6,500 to $3,122 within 1 month.
In a relatively short period of time, the price of #BTC dropped by more than 51 percent.
Already, analysts have begun to lower their #forecasts in the short-term performance of BTC.
#Fundstrat, a firm led by Tom Lee, a Wall Street analyst who consistently stated that Bitcoin would reach $25,000 as recently as January 28, set a price target for BTC at $2,270.
Robert Sluymer, a Fundstrat Global Advisors market strategist, said:
“The price #structure for most cryptocurrencies remains weak and appears vulnerable to a pending breakdown to lower lows. Fundstrat’s advance/decline indicator is at risk of breaking to new lows.
A break below the fourth-quarter lows at $3,100 would imply a decline to $2,270, while a move above $4,200 is needed to #signal Bitcoin is beginning to improve.”
Similarly, highly regarded #cryptocurrency traders such as DonAlt and The Crypto Dog have said that Bitcoin is likely to fall to the low $2,000 region if it fails to recover beyond $4,000 in the #foreseeable future.
But, although the next likely move for BTC is to #demonstrate a lower level of momentum in the upcoming weeks, The #Crypto Dog noted that it is still a risky period to short the asset.
“Shorting [Bitcoin at] 33XX is like shorting 63XX. Maybe the #floor breaks on this go, or maybe you’re going to be wrong 5 times in a row. (Maybe it never breaks) Holding a short from higher up – yeah that’s perfectly #reasonable.”
#Hsaka, a cryptocurrency technical analyst, also suggested that it is difficult to short Bitcoin because it is defending the $3,300 support level with relative #strength.
A problem could occur if #Bitcoin continues to show stability in a low tight range and the price trend of major crypto #assets stagnates.
Previously, Mark #Dow, a trader who shorted Bitcoin from its all-time high, emphasized that if BTC does not recover to $6,000 swiftly, it could spell trouble for the #asset in the short-term.
“Still a beautiful #chart. If bitcoin can’t bounce to at least $5k – $6k soon, it’s a really bad sign for the #cyberbulls. And if it breaks down thru the yellow line at any point, even the HODLers need to GTFO,” Dow said.
Hence, even if #BTC does recover to $4,000, it is not in the all-clear to declare a proper bottom and enter a consolidation period.
CRYPTO MARKETS NEED SOME #VOLATILITY
A handful of tokens in the likes of 0x, ICON, #Aelf, and #Chainlink have shown decent gains against both Bitcoin and the U.S. dollar in the past several days.
Binance Coin, for instance, which recently became the 10th most valuable #cryptocurrency in the global market, increased by 25 percent against the USD from $6.25 to $7.84 in the last seven days.
Due to the bear #market, cryptocurrencies have started to show some independent #movements, which could be considered a positive element in the long-term growth of the #sector.
However, it may also lead many crypto #assets to fall by large #margins against the USD while a handful defend key support levels, leading to a short-term #bloodbath.