The volatility of the cryptocurrency market has been the talk of the market since the beginning. One day we see the price value of bitcoin go through the roof and the next day we see its value nosedive to a new low. The recent upward trend that is witnessed in the price value of bitcoin has taken the investors by storm with more and more cash coming in the crypto space. But according to a crypto expert, the investors might want to hold themselves as of now because the chances of bitcoin nosediving again might become too high as suggested by the previous trend.
A cryptocurrency technician, Robert Sluymer, stated that investors should be careful regarding their interest in the market as the bitcoin price maybe seeing a big drop very soon as seen from the past trend. Talking to CNBC, Sluymer stated that:
I think that bitcoin’s at a very critical stage because if that uptrend’s going to continue, it needs to dig in right here.
In the interview, Sluymer referred specifically to a chart that portrayed the relative strength index of the bitcoin. According to the chart, bitcoin has hit a key support value that it hit back in June and in mid-July. As per the relative strength index of the bitcoin it is indicated that it is very oversold currently which may look like the perfect buying opportunity for the cryptocurrency but the investors planning to enter the arena need to be careful.
I look here thinking this is where it’s got to stick, this is where you can put the long trade on. But it has to be done with very tight stops because if bitcoin cannot dig in here, then that short-term trend defined by the 15-day moving average begins to roll over and I think it’s vulnerable to a collapse into that $6,000 range.
According to Sluymer, if the trend shown by bitcoin continues and if it drops below the value of $7,400 this time around, then there is a strong probability that its value will drop even further back to the lows seen in June and mid-July.
Last week, bitcoin saw an increase in its value above $8,000 showing a promising trend going forward. But as soon as the rejection of the proposal for the establishment of a bitcoin exchange traded-fund took place, it saw a sudden nosedive in its price value almost immediately.
The circumstances suggest that after a most probable nosedive the value of bitcoin is expected to boom in the near future if certain factors come into play. If the establishment of a crypto-linked exchange traded-fund and a regulatory framework for the crypto world take place, then the value of bitcoin is expected to rise. After the establishment of an ETF more and more institutional level investors will be incentivized to enter the market. As a result the market will move towards security and stability in the near future.
I think 2018 is the year where the mechanisms to allow retail consumers to get into cryptocurrencies start to open themselves up. The price will become more stable.
Alexis Ohanian, the VC of Initialized Capital and co-founder of Reddit, even predicted the value of bitcoin of shooting above the threshold of $20,000 by the end of this year.
At the end of the year, Bitcoin will be at $20,000. And Ethereum will be at $15,000 [which he later clarified as $1,500]. Great, now people can call me out if I’m wrong.
Regarding the ease of usability of bitcoin, Alexis stated that this market is continue to grow this year. As per the volatility, Ohanian stated:
As volatile as it’s been, we see it continuing [to go] up over the long term, because more and more people are going to look for alternatives to fiat as a store of value as we see currency fluctuations with states failing and other uncertainty, that makes having a digital store of value like bitcoin something that’s desirable, because you don’t have to worry about withdrawing it from a bank or the value disappearing as a government money.
Concerning the robustness of the market of bitcoin Alexis mentioned that it has been battle tested in the past and will likely to see more growth in the future.
Bitcoin has had quite a bit of battle-testing over the years, and it’s certainly the most robust [cryptocurrency], and certainly one of the best proofs of crypto being a store of value.
The Final Verdict
The suggestion made by Sluymer to the investors certainly seems to be valid to get ready for a probable nosedive. Although bitcoin might see a sudden drop soon, but as we move into the future with the developments being made in the sectors regulations and security in the form of ETF, we will most probably see a sudden increase in the worth of bitcoin as more and more institutional investments will begin to pour in the market. In the short term, the investors might have to take a hit with a low bitcoin price very soon, but moving forward, the bitcoin followers might be in for a roller coaster ride.