Cryptocurrencies have taken another leg lower overnight, extending the losses from Japan’s FSA crackdown and recording a significant drop of Bitcoin from around $8,000 to the lower end of $6,000 for the first time since the 6th of February. As pressure mounts on the embryonic digital-currency sector, the Bitcoin price dropped the lowest level this year, with global central bankers raising questions of viability, as well as government increasing scrutiny.
Improve measures to prevent money laundering
The price of Bitcoin has dipped below the $5,900 mark, after initiating dipping below the $6,000 mark on the 23rd of June. After four consecutive sell-offs as it is shown in the price chart, BTC officially fell to a yearly low. It was also considered as the lowest intraday print for Bitcoin since November last year.
But, Bitcoin is, in fact, the best performer since the FSA headlines of Japan, while Bitcoin Cash, as well as Litecoin, is down to 20% since Friday morning.
This Friday, on the 23rd of June, the Financial Services Agency or FSA of Japan ordered six of the biggest crypto-trading venues of the country, to improve measures to prevent money laundering. The companies had to submit their plans by the 23rd of June.
Recently, what also came under fresh pressure, after the two South Korean exchanges said that they had been hacked, was peer-to-peer money. That also raised some new concerns about the security of investor holdings. The central bank of India gave commercial lenders until early July to stop providing services with any company which deals with digital coins, in an order which is reportedly being challenged in courts.
Almost identical to 2014
However, we can say that the price trend of BTC was pretty much identical to the fall of BTC four years ago, in 2014. At that period, it experienced 80% correction from its all-time high. Moreover, the fall of BTC in 2014 and 2018 is not different, given that both the corrections were irritated by the eruption of a local investor bubble.
From the 29th of May until the 10th of June, Bitcoin, as well as the rest of the cryptocurrency market seems to be recovering, recording 12 days of stability and consecutive minor gains. But, there was a massive sell of the 11th of June which led the price of BTC to fall abruptly from $7,700 to $6,670 initiated the start of yet another short-term correction, leading BTC to plunge to the $5,000 region.
As of now, a lot of traders see a BTC bottom at around $5,000, some of them below the $ 5,000. But, unless the market fails to bounce at all and show no signs of mid-term recovery, it is hard to see BTC dropping below $5,000.
Furthermore, a drop from $20,000, the all-time high price of BTC, to $5,000 is going to result in a 75% drop since its all-time high, and a dip below that mark would lead BTC to experience a correction which is worse than its correction in 2014.
Given such difference in the level of interest, as well as hype and demand around the cryptocurrency market, especially amongst investors in the public market, it is highly unlikely that BTC will drop below $5,000 and likely that it will settle in the lower region of $5,000.
On Sunday, Bitcoin was down 4.9% as of 11:47 in New York. Bitstamp is one of the primary price sources for cryptocurrencies, which have no unified quotation system and can also vary substantially among countries.
Assuming a $5,000 bottom of BTC, where it will go?
Some investors in the public market, mainly Wall Street, usually develop a keen interest in an asset or a commodity which drops 70 to 80% in value in the short-term, as it represents a viable buy chance.
Those that have also seen a potential influx of capital welcomed the intersection of cryptocurrency and Wall Street. Somewhere in the middle of the month May, cryptocurrency wallet, as well as exchange Coinbase released a new suite of products which was designed to attract institutional investors by relieving security, as well as regulatory compliance concerns. Speaking about the product release, the VP of Coinbase referred to “$10 billion” of Wall Street money which now had the potential to enter the market.
Mid to long-term traders, as well as investors, are not momentum traders; they have the purpose for some investment opportunities which could generate substantial gains in the next 12 to 24 months.
As we already mentioned, Bitcoin has seen this exact movement in 2010 and 2014, as well as some minor corrections in between 2014 and 2018. Every revision has led BTC rebounding past the all-time highs that it had before and establishing a new high at a zone that is 100 to 300% higher than the previous zone.