Bitcoin, the world’s most prominent cryptocurrency, dropped roughly 5% in 24 hours as the digital asset struggled with varying challenges.
The price of bitcoin fell to as little as $7,918.28 around noon EDT today on CoinDesk, down approximately 4.75% from the same time yesterday.
At this point, the digital currency was trading at its lowest point since October 7, additional CoinDesk figures reveal.
The cryptocurrency later recovered, rising slightly to trade at $7,974.96 at the time of this writing.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
‘Broad-Based Selling’
Jeff Dorman, chief investment officer of asset manager Arca, pointed toward widespread selling activity when explaining bitcoin’s recent price declines.
“Today’s move lower is less about the magnitude and more about the correlation and direction,” he stated.
“We’re hearing that the broad-based selling is being driven more by market makers and those that are short pushing the market lower, rather than driven by long unwinds or selling.”
“With volumes still quite low relative to this summer, shorts are incentivized to keep pushing prices lower until they hit resistance,” Dorman added.
Technical Analysis
Several market observers emphasized technical analysis, using it to explain bitcoin’s recent fluctuations.
“We believe the current Bitcoin price action is technical in nature,” said Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital.
“The price broke down from a descending triangle last month and has since continued to test the key support at $7,750,” he stated.
“There was some relief ahead of the Bitwise ETF decision last week, but the SEC’s rejection cut the surge short, which, accompanied by declining volumes, has brought BTC back to the pre-ETF-anticipation, consolidation range,” DiPasquale explained.
“We expect bears to once again try and break the $7,750 support, which, in the absence of market catalysts, has the potential to clear the way for a drop to $6,000,” he added.
Jon Pearlstone, publisher of the newsletter CryptoPatterns, also weighed in on the matter.
“Bitcoin has been in a consolidation pattern around $8000 since late September when price broke key support at $9500,” he stated.
“There was no buying follow through last week when price spiked above $8500 and that usually leads to a retest of the bottom of the consolidation pattern (around $7700) which is what looks like is happening today,” said Pearlstone.
“Volume is higher but there’s no signs of a real breakdown yet.”
“If we see continued selling the target for the current bearish pattern is the $6500 range and if current support holds the bulls next target is a retest of the breakdown at $9500,” he added.
Deteriorating Market Sentiment
“After seeing a massive run-up in long-term sentiment on Bitcoin from December 2018 to late August 2019, we have begun to see a significant drop off in long-term market sentiment towards BTC,” said Joshua Frank, cofounder of cryptocurrency analytics platform TheTIE.io.
“Long-term sentiment on Bitcoin has seen its largest decline since 2018,” he emphasized.
The chart below helps illustrate this sharp drop:
The world’s largest digital currency by market capitalization has also experienced a reduction in tweet volume, according to additional data provided by TheTIE.io.
“30 day average tweet volume on Bitcoin has fallen by a massive 38% since July, an even steeper decline than price,” said Frank.
The chart below helps illustrate this drop in activity:
“Since Bitcoin’s bull run this summer, we have begun to see a large decline in retail interest in the cryptocurrency as evidenced by decreasing trading volumes and conversations around BTC and crypto more broadly,” he stated.
“I don’t think that this is necessarily purely that the market is negative on Bitcoin and other cryptocurrencies, it is an issue of waning interest in the asset class.”
Author: Charles Bovaird
Read more at: https://www.forbes.com/sites/cbovaird/2019/10/16/bitcoin-prices-drop-as-market-suffers-multiple-headwinds/#7950de6c370f
