While prices have continued to stumble, falling short of an expected bull run above $12k, bitcoin values have remained stable at those seen throughout the consolidation period, which may point towards a more stable future. As healthy corrections could keep a parabolic run, and the crash to follow, at bay.
While the key level of $12.1k may be met with somewhat long-term resistance, most oscillators suggest that this could be a positive turning point in the overall valuation of the asset in the coming years. As crypto technology and adjacent business holds a firm interest for many, and for those waiting in the wings for prolonged aggressive monetary policy, to reflect in the devaluation of currency, bitcoin remains the favorable choice as a hedge asset. Making future market sentiment resoundingly positive.
There is also evidence of liquidation buy back from new users as exchanges like Bitvavo see continued adoption by retail investors. Bringing market control away from institutional investors and spreading wealth concentrations more evenly across the board. All signs point to continued adoption, meaning that the market still showcases some real staying power.
Buy the Dip
Alongside its better known “HODL” mentality, many bitcoin investors are clamoring to indulge in a practice called “buying the dip”, despite recent market corrections. Blockchain analytics have revealed that accumulation address numbers have risen by 2%, now up to 513,000. Showing that new investors are indeed coming aboard to absorb newly freed liquidity, flocking toward the coin as prices steadily drop. Suggesting possible sustained institutional interest.
This imbalance between absorption and current prices suggest that the current decline is no more than a standard bull correction- setting bitcoin up to rise in value once again. With the CEO of Singapore-based Three Arrows Capital tweeting “reality is that markets frequently retrace one third or more in bull Mets [sic] after local euphoria. BTC 8.8k… [is a] perfectly healthy target and your trading plan needs to incorporate nonzero probabilities to such levels.”
Which could provide extra confidence to those investors looking to scoop up BTC at a low enough rate that they could reasonably expect to see decent ROI in the shorter term. Which may mean that bitcoin could be set to stay on the bearish trajectory of a head-and-shoulders breakdown, as seen on Thursday.
Prepare for a Breakout
As this break in the six-month long bull trend has garnered some unprecedented speculation, it could invite more selling as FOMO increases amongst newer retail investors. Allowing a better bottom line for buy ins. However, the coin continues to stand now on the key level that it has held since June, between the $9k and $11k market line.
Despite the drop, it’s still a strong position and one that the asset has held firmly for nearly four months. Similar pullbacks had been seen earlier in the year were swiftly reversed, positive market sentiment, which has no reasonable reason to have changed. Specifically, as DeFi lockup’s pull liquidity as investors scramble to tokenize BTC on Ethereum’s network. Which could be a reason why we’d expect to see a prolonged period of consolidation at this time. Because of this, and other traditional safe-haven asset temperament, analysts are optimistic about a breakout happening towards the end of bitcoin’s Q3.
The Long Haul
Quantitative easing practices and shockingly low interests’ rates continue to be pushed by governments, in efforts to soften the blow brought on by the novel coronavirus pandemic. These efforts are expected to usher in a new wave of hyperinflation and devaluation of top world currencies in the coming years. Specifically, those that are also closely tied to growing trade tensions. Markedly, those spurred between the UK and EU, as continued discord over impending Brexit agreements heats up again.
The US is also not innocent of these matters, as the list of countries and trade tensions only seems to grow. Which could be further exacerbated by any expected chaos come to fruition in November. Both of which have engendered a failing faith in the respective fiat systems. Historically, as seen in places like Venezuela and Argentina, these types of economic hardships have only served to buoy the adoption and interest in cryptocurrency markets like bitcoin. Further suggesting that the digital assets future is all but secured.