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Bitcoin drops amid crypto carnage

Fawad Razaqzada Fawad Razaqzada 23/04/2021
Bitcoin drops amid crypto carnage Bitcoin drops amid crypto carnage
Bitcoin drops amid crypto carnage Fawad Razaqzada
Cryptocurrencies have fallen sharply this morning, with Bitcoin extending its recent run of poor form. All digital coins had lost significant chunks of their gains, although some had managed to bounce off their lows. BTC was now 25% lower compared to its all-time high hit a couple of weeks ago, potentially making it appealing for long-term buy-and-hold investors. Regulatory concerns, fears over valuation and bullish exuberance at overbought levels all added to the selling pressure. Bitcoin and other cryptos had also gotten overheated during the hype around the Coinbase IPO, which triggered a classic “buy the rumour, sell the news” type of a reaction. With the weekend approaching, not many investors will be in a rush to buy this latest dip, given what happened last Sunday. So, would-be buyers are potentially delaying their decisions to step in on the long side, which increases the risk we may see prices fall further lower in the next couple of days.
 
The longer-term outlook for bitcoin remains fundamentally bullish owing to its limited supply and growing demand. Many investors will be waiting to jump on the long side once this current weakness cycle ends. But it could be a long-ish wait. Still, Bitcoin remains fundamentally supported because of growing demand as major companies warm towards cryptocurrencies. So, even if prices were to correct themselves a bit further from here in percentage terms, it is unlikely to be in the style of the late 2017 drop, when Bitcoin went on to lose more than 80% of its value by late 2018. Bitcoin has become a lot more stable and although it will dip here and there, like it has now, it is unlikely to drop by similar amounts in percentage terms again. Indeed, there will be many who will see this as a major opportunity to get onboard having missed out on the ride from much lower levels.

BitcoinSource: ThinkMarkets and TradingView.com

Short-term support is seen around $48K, although so far Bitcoin hadn’t shown any signs of a reversal here. If this level breaks and should prices drop sharply further, then the area around $40-$42K is the next potential demand zone where we could see a possible bullish reversal unfold. Resistance is seen between $5300 to $5130, an area which was previously support.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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