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Bitcoin Single Biggest Day Dip

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Bitcoin has just taken the single biggest day dip that it’s had in years

Bitcoin has just taken the single biggest day dip that it’s had in years technically this happened over two days I guess but 51 percent to the bottom over 50 percent in 24 hours 63 percent if you’re measuring from the local top that we had about three weeks ago 63 percent you know what this looks like to me about four years ago back in August of 2016 I’m gonna make a comparison to four years ago it’s not exactly the same I get that you know the dip back here not as severe I get that but there are some similarities for instance the market structure looks similar besides that just like today in 2020 back here in 2016 this was about a year after the market had been going up for a little over a year a lot of people were suspicious back in 2016 of the this first rally right here see this first rally in 2016 was caused because a lot of people bought into a Ponzi scheme so people weren’t sure if it was leave of, if it was legitimate so this second rally the one I’m comparing it to people felt a little bit better about this one because you know they just put a little bit more of their trust and boom shakeout just like we have today yet after this Bitcoin never went that low again.

I was disheartened to see a 50% shakeout in Bitcoin of course I was disheartened did I ever think of selling did I ever think of capitulating no I honestly didn’t the fundamentals for Bitcoin are still there, you know that the better question is if Bitcoin is supposed to be this uncorrelated asset Hey bitcoins supposed to be this hedge what the hell is going on hedges are not supposed to do this and the global markets are tanking all across the world if Bitcoin was ever gonna be a hedge wouldn’t now let’s see.

Comparing 2008 global financial crisis

I want to bring you back now to twelve years ago this was before Bitcoin even existed so we need to go to traditional markets I’m talking of course about a special time in financial history and that was the 2008 global financial crisis many people consider the 2008 global financial crisis to be the worst financial crisis since the Great Depression now that’s of course before 2020 but everything in 2008 tanked including the hedge gold did you know that gold also suffered a massive dip in 2008 despite the fact that it truly is an uncorrelated hedge why did that happen gold is supposed to be the hedge well I mean Gold probably dipped for you know a multitude of reasons it’s probably most likely you know there’s fear and negativity in the air in 2008 maybe some people needed cash maybe hedge funds were managing their money overall I think it was just because there was a lot of fear and negativity in the world at this time but guess what gold is a hedge a few months passed and gold went right back up and you know the year passed and it went right back up and pretty soon gold was rallying higher than ever so the point is even hedges are susceptible to massive sell off so hopefully just like gold in 2008 hopefully we see Bitcoin rallying backup as well it’s not just me who thinks that by the way Ari Paul is the chief investment officer for an investment firm and he thinks something similar he says he says I’ve had a really simple mental model for Bitcoin in a severe equity sell-off that’s been unchanged since literally 2006 look at gold heading into during and coming out of the 2008 financial crisis I think that’s Bitcoin this time around and that’s what I think.

Bitcoin Price fell below $9,000

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bitcoin price drop

This week Bitcoin price continue to fall, the price fell 4.4% Friday, droppng below $9,000, lowest in last week.

Market experts belived it’s mainly due to the lack of positive market drivers and speculation that the U.S. Federal Reserve might pause this year’s
rate-cutting cycle, which could curb demand for the cryptocurrency as a potential inflation hedge.

The price dropped to $8,800 as of 18:57 UTC (1:57 p.m. New York time), according to Trading View. It’s still
more than double where bitcoin was at the start of the year, leaving the cryptocurrency as one of the world’s best-performing asset classes in 2019.

Bitcoin had rallied more $2,000 in late October after Chinese President Xi Jinping declared that the country would embrace blockchain –
the decentralized computing networks underpinning cryptocurrencies – as a “core” technology, followed by the reveal of hundreds of blockchain projects already in motion. Since then, though, the price had mostly fluctuated within a range between $9,100 and $9,600.

The world’s most prominent crypto currency Bitcoin fell to as little as $8,666.39 around 10 a.m. EDT, having lost nearly 6% of its value in less than 24 hours, CoinDesk data shows.

At this point, the cryptocurrency was trading at its lowest since October 25, additional CoinDesk figures reveal.

Following this decline, bitcoin has experienced only modest gains, rising from its intra-day low to nearly $8,900 around 5 p.m. EDT.

The Friday’s price drop accelerated after bitcoin currency broke below its 200 day moving trading average of $9,186, which had been seen as a price support by some traders using technical analysis.

“This is a pretty classic example of a technical move,” said Kevin Kelly, co-founder at Delphi Digital, a cryptocurrency research firm in New York.
“It just sort of broke to the downside.”

The price drop appears to have triggered margin calls for some traders, leading to position liquidations and creating additional selling pressure, Kelly said.

One of the macro-economic theory for buying bitcoin is that, it’s like gold, and can be used as an inflation hedge, Kelly said. But with increasing signs
that the economy might be responding to the Fed’s three interest-rate cuts earlier this year, speculation is mounting that the U.S. central bank might refrain
in the near term from further moves to ease monetary policy, he said.

John Todaro, director of digital currency research for TradeBlock, offered a similar point of view.

“Bitcoin, and the digital currency market in general, posted a strong rally following the Chinese President’s comments in October, and you are starting to see prices come back some as investors tease out the actual implications of his comments,” he stated.

“It is still unclear to the extent, if any, China will actually embrace digital currencies and non-sovereign assets such as bitcoin or if the country is simply embracing private blockchains.”

Going forward, he emphasized that bitcoin’s lackluster trading activity makes it vulnerable to notable price fluctuations.

“Bitcoin has seen renewed volatility over the past 10 days and could easily push past support/resistance levels during times with thinly traded markets.”

While many traders thought bitcoin, as the original blockchain and biggest digital asset by market value, might benefit from broader adoption of the technology, if China has been at work developing a digital version of its own currency, it could be a win for blockchain technology on the whole but mean little for bitcoin today.