After rising exponentially for three solid days, bitcoin prices fell sharply on Thursday afternoon dropping over $500 in a four-hour period. The price has rebounded since the drop hovering above a $2300 per BTC average across global trading platforms.
Stairs Going Up, Elevator Going Down
As the saying goes ‘what goes up must come down.’ At some point, a correction after Bitcoin’s intense bull run was to be expected. During the early morning in the Western Hemisphere on May 25, the price of bitcoin hit an all-time high of $2760 average across global exchanges. A few hours later the price took a downturn seeing a five leg drop to a low of $2221 per BTC.
Of course many had expected the price to correct, but the degree was unknown. There wasn’t any bad news or headlines giving a reason for the dip. A lot of traders believe that it was a typical pre-weekend correction that has taken place every weekend for over a month and a half. The weekend prior to the Consensus 2017 conference in New York was the only exception as there was a lot of hype happening. Additionally, it’s the end of the month, and some traders believe people are merely paying their bills and more than likely most were just taking a profit.
At the time of writing, some technical indicators suggest we could still ride back up the ladder, while other trends tell a different story. Both moving averages still have a nice gap as the 100 Simple Moving Average (SMA) is still higher than the 200 SMA. Alongside this, the Stochastic and Relative Strength Index (RSI) still shows warnings of overbought conditions, but these signals have been saying that for the past two months consecutively.
At press time looking at order books and market depth across a few top exchanges show there seems to be a strong floor in the $2000-2100 range. Even though the dip took place volume has been smoking hot with $2.3 billion USD worth of bitcoins traded on May 25. If the price kicks back into gear, it will likely test many resistance points above the $2500 range and higher.
Will We Relive Memories of the Past — Or Is It a Different Price Story?
Overall bitcoin is still trending up looking at the chart’s weekly view, and the bull stampede may not be over. However many bitcoin traders have great recollections of the 2013 highs and the following year-long bear run in 2014 to a low of $180. Some are convinced there’s a possibility the downtrend pattern could happen again due to these memories of the past. Yet there are those who believe there are strong fundamentals keeping bitcoin’s price this high including more investors, media attention, and the overall rise of cryptocurrency adoption in general.
Bear Scenario: After the recent $500 sell off bears may play their cards and shake more weak hands out. At the moment a drop to the $2000 range looks unlikely but could happen if bulls are exhausted or sitting out for lower levels. At press time bitcoin’s price is moving sideways just above the $2300 range.
Bull Scenario: Bitcoin’s price has consolidated, and buyers can take the reigns once again. If resistance is broken above $2500 in the short term, then we could very well see some benchmark prices again. Markets are still very bullish, and volume is at unprecedented levels causing a few exchanges to lag over the past two weeks.
What do you think about the price of bitcoin dropping to $2200? Do you think bitcoin will continue to rise to higher levels? Or do you expect bears to lower the price further? Let us know in the comments below.
Disclaimer: Bitcoin price articles and markets updates are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”
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