Bitcoin drops below $30,000 a cause for concern |
Bitcoin's short break below $30,000 has reignited the debate about a new crypto winter.
However, experts say Bitcoin has good fundamentals and market conditions in 2021 will be very different from the last major crypto crash of 2018.
Analyst and statistician Willy Wu said: “We are still far from a bear market and traders are afraid of technical factors that appear in the stock market, such as volume and price action.
What will happen to bitcoin:
Bitcoin's rally in the past 12 months has a lot to do with massive purchases of the currency by billionaires and corporations.
Increased interest from major financial players has solidified Bitcoin's image, exacerbating delivery bottlenecks and driving prices higher.
But since Bitcoin peaked at over $63,000 in April, the past few months have been tough for the world's largest cryptocurrency.
China's nationwide crackdown on bitcoin miners certainly won't help.
“The recent news of the mining shutdown in China reminds people of China every few years,” said one of the largest bitcoin mining operators in North America. Banks are prohibited from using bitcoin. But it is actually different. I have never seen such a mass exodus.
More than half of the world's bitcoin miners are in China, and Beijing has made it clear it wants them to go.
In May this year, the government called for action against bitcoin mining and trading in what it called a “mining exodus.”
This downward momentum in bitcoin prices is largely due to recent Chinese mining initiatives that have lowered the global hash rate.
Although long-term token holders see this as a very positive step towards the network, short-term traders are wary of uncertainty.
Currently, the fear and greed index is 10, which indicates extreme fear.
The market in general is driven by dynamics that sometimes go beyond the fundamentals. The current mood seems to reflect what we see here.
Comparison between 2021 and 2018:
Analysts believe that this is unlikely to mark the beginning of a new crypto winter. Instead, they expect that we are entering a period of overreaction and that this overreaction will be corrected in time.
We may not see another crypto winter because the industry is more favourable, adoptive, and diversified than it was in 2014 or 2018.
Speculators insist that fundamentals are much stronger in 2021 than they were in 2018 during the most recent bear market.
The acceptance of determining the intrinsic value of cryptocurrencies has increased. This is especially important because the Bitcoin entry is on the verge of collapse. This has resulted in more groups of users who believe in the value of money and thus promote it.
Wu said: All network fundamentals are optimistic, the most important thing is that we are at the highest level of new customer growth.
Bitcoin also recently completed its first major upgrade in four years and promises to provide additional functionality, privacy, and efficiency.
In the short term, proponents of the cryptocurrency believe that the price is stable at a price point that is still above the previous level.
This is in line with the pattern of crypto assets, which are well above previous highs. As manufacturers continue to innovate technologically, they will adapt to the new standard in the coming years.