According to experts at Fundstrat, the price drop of Bitcoin to below $7,000, a two-month low, indicates that the coin will have a difficult time recovering in the short-term.
Bitcoin Uptrend Coming
Robert Sluymer, technical strategist at Fundstrat Global Advisors believes that $7,777 is the key level Bitcoin will have to reach to signal an uptrend is underway.
“The downtrend that began in early May is still intact and will need to be reversed to signal an improvement for BTC,” Robert Sluymer told CNBC.
As of now, Bitcoin is trading at $6,775, following a drop down to about $6,720 yesterday morning. This comes after the cryptocurrency fell more than 10% over the weekend to a low of about $6,650 on Sunday, according to CoinMarketCap. For context, Bitcoin is down almost 50% this year and more than 60% from the all-time highs reached in mid-December.
One thing being eyed by analysts is the ‘Upper Bollinger Band,’ something of which Bitcoin hasn’t consistently hit according to executive director of institutional equities at Nomura Instinet, Frank Cappelleri. Although the level varies, it currently stands at around $8,577. With this resistance level in mind, Bitcoin must gain 25%-30% for a rally to hold.
Moving forward, it’s important for the coin to hold support around $6,747 this week, says Chris Kimble, CEO of Kimble Charting Solutions. If that fails, Bitcoin could drop to around $2,000, he added.
Things to consider with regards to the weekend’s drop in Bitcoins prices are Saturday’s news of a hack at (the relatively small) South Korean cryptocurrency exchange Coinrail, which primarily involved lesser-known altcoins.
Also, reports last Friday that discussed U.S. regulators investigating potential price manipulation at some major cryptocurrency exchanges. It’s worth pointing out, though, that these regulatory issues are likely, in the longer term, to actually help Bitcoin’s price, as Coinbase and Circle look to gain licenses from the U.S. Securities and Exchange Commission (SEC).
Looking to the Future
Despite the not-so-positive drop in Bitcoin’s price as of late, other experts are still holding on to their positions. Sluymer’s Fundstrat associate Tom Lee believes the slowdown won’t last long. Towards the end of last week, Lee, speaking with Bloomberg, doubled down on his $25,000 Bitcoin price prediction.
Lee holds on to his position because he believes that traditional financial institutions will begin to pile into the space as they see more ‘lucrative’ business opportunities arise. Lee also believes that the regulatory climate around cryptocurrencies will only improve as cryptocurrencies reach higher levels of mainstream and retail adoption.
Others, like Binance CEO Changpeng Zhao, have made a point to clarify that this recent price dip is not unusual, as a lot of volatility can take place in the cryptocurrency world at any given time. Zhao says that ups and downs occur every single day, and reiterates that long-term veterans acknowledge that this is nothing to worry about when looking at the bigger picture.