Bitcoin is trading below USD $10,000 for the fifth consecutive day. Causes for this price correction can be tied to a series of predictable factors, none of which present a long-term threat to the overall crypto market.
BITCOIN INVESTORS ARE TAKING PROFITS
When commodities experience rapid spikes in value, some investors will always sell to secure their profits. Thus, retracements are a common and expected component of any appreciating asset.
The move above $10k represented a significant psychological milestone for Bitcoin, which prompted a notable correction on February 20th. Since then, however, the price has remained relatively stable, and even moved close to the 10k mark more than once. Whereas there is no clear indication that the 10k mark will be broken again over the next few days, there are also no signs that the price will fall much further.
CORONAVIRUS FEARS ARE SLOWING MARKETS
Over the past two days stock and commodities markets around the world have tumbled. Analysts point to uncertainty over the coronavirus as the chief cause. The crypto markets appear to be no exception. Predictably, the price of gold has spiked.
Of note is the fact that the Bitcoin hash rate has flatlined. In fact, it has declined slightly since the beginning of the month. As most mining now takes place in China, it is clear that mining farms have quit adding to their inventory. This fact is not surprising given the chaos the virus is causing across China’s economic and industrial sectors. Until this problem is resolved, Bitcoin prices will likely remain subdued.
PRICE FOLLOWING A PREDICTABLE TREND
Although highly volatile, the crypto market is beginning to demonstrate patterns as it matures. The current Bitcoin correction fits similar movements that have taken place since 2016. Each year the price begins to slide in late February, with a recovery toward the end of March.
It is thus not surprising that the price has declined, yet a recovery could come at any moment. The block reward halving is a new factor that has not taken place in five years. Analysts have long expected the price to move up as a result. This fact adds to the belief that the current dip in value is, in fact temporary.
Regardless of the present market condition, the overall outlook for cryptocurrency is tied to adoption of blockchain technology, which continues to accelerate. Thus, is strong reason to be optimistic for long-term growth.
Why do you think Bitcoin is in the red again today? Add your thoughts below!
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