24 Nov How much further can bitcoin fall?
A quick look at cryptocurrency exchange trading today shows bitcoin in a potentially perilous plummet below $3900 for the first time in 2018.
By late afternoon Saturday, bitcoin had dropped to the low $3900 range with no indication where the bottom is in this most recent round of volatility.
Bitcoin by the numbers
Let’s look at the freefall of bitcoin in the past four weeks in a chart from Blockcoin Today.
Bitcoin dropped from a four-week high of $6,526.19 on November 7 to $3,873.56 late Saturday afternoon. That’s a 40.6% loss in value in just 17 days. It’s no wonder trading volume is down and lots of cryptocurrency investors are nervous.
Burniske predicts new bottom and long consolidation period
It’s feeling like bitcoin’s moment of truth has arrived.
Chris Burniske, a partner with VC Placeholder Management, said the price of BTC has dropped steeply in the past ten days due to three key factors making BTC unable to defend strong support levels at $6,000.
He cited the US stock market retrenchment, the Bitcoin Cash hard fork, and a selloff of Ethereum as contributing factors.
In just the past week, more than $65 billion in market capitalization has been lost by major cryptocurrencies.
Burniske told Bloomberg TV because the US stock market has dropped, investors are cleaning up riskier investments such as cryptocurrency. “First, there is a broader risk-off environment throughout the markets. Your riskiest assets tend to get sold off most in a risk-off environment. That’s definitely happening with crypto,” he said.
“Ethereum has been through a broader deleveraging from the ICO boom from last year where funds were raised, and those funds were used to raise and it’s kind of a cyclical deleveraging. The third thing is Bitcoin was forming support at $6,000 for about 3 to 4 months and there’s a lot of turbulence around a child of Bitcoin called Bitcoin Cash, which has also forked and that has perturbed the markets and broken that technical indicator and so we are searching for a new bottom in crypto land.”
Burniske said it’s particularly hard to put a value on a new asset class like cryptocurrency because it’s so new. With traditional assets, you have established models to work with. “Within crypto, we’re creating the models as we speak, because this asset has only been around for 10 years.”
Pick your prognosticator
We’re definitely in new territory for bitcoin and cryptocurrency. Analysts’ predictions are all over the map and you can pretty much pick your path forward, depending on whether you’re bullish or bearish.
For example, on CNBC Tom Lee just a couple of days ago was still predicting $15,000 bitcoin by year-end. He may regret it.
Michael Moro, the CEO of cryptocurrency trading companies Genesis Trading and Genesis Capital Trading, said the BTC could bottom at $3,000 in an interview with CNBC on Nov 23.
“You really won’t find [the floor] until you kind of hit the 3K-flat level,” the Genesis Trading & Genesis Capital Trading CEO said.
Moro advised investors against buying the dip. He said long-term investors are more willing to wait out bitcoin’s fall and wait for the price to eventually return.
Obviously, Burniske sees a longer-term recovery for a return to higher bitcoin values.
The secret for investors may be taking Moro’s longer-term view of bitcoin as a new asset class and holding through the stormy months ahead.