Bitcoin

Bitcoin Price Bounces Back To $6,500 as Bears Ease Selling Pressure

The price of the leading cryptocurrency Bitcoin has recovered a bit from the $6,100 region and now trades just above the $6,500 mark, representing an increase by 6.5% over the past 24 hours. Like always, the price of the smaller cryptocurrencies and tokens have also recorded some gains over the past few hours as they follow the Bitcoin price trend.

Tether price manipulation report causes oversold conditions

A research conducted by John Griffin, a finance professor at the University of Texas, and Amin Shams, a graduate student, suggests that stablecoin Tether and its issuer Bitfinex could have been involved in the price surge of cryptocurrencies last year that saw the bitcoin price surge to the $20,000 region towards the end of the year.

Back in December, some industry experts expressed concerns regarding the sharp rise of the price of Bitcoin, suspecting that there is market manipulation involved. This claims led to the U.S government issuing a subpoena against Bitfinex at the start of the year.

In his research, Griffin suggested that the price increase of Bitcoin most of the time coincided with the mint of new Tethers by Bitfinex. He stated;

There were obviously tremendous price increases last year, and this paper indicates that manipulation played a large part in those price increases.

The paper which was released yesterday, sent waves of panic across the cryptocurrency world and led to an oversold situation for most cryptocurrencies. The rally saw Bitcoin price drop from its previous $6,600 to the $6,100 region in less than 24 hours.

An RSI below 0.30 means that a currency has been oversold and the RSI of Bitcoin dropped to 0.28 after the report broke out yesterday. This led to the Bitcoin price plummeting to the $6,100 zone.

However, the bulls have been unwilling to sell since the coin dropped, allowing Bitcoin price to recover a bit over the past 24 hours. Despite that, the downward trend of Bitcoin is still more than the upward trend, thus, this minor corrective rally wouldn’t last and the price would plunge again, probably to the $5,000 region.

Several analysts and traders are still expecting BTC price to dip to the $5,000 region, with many calling it the real bottom. Many claims that if the Bitcoin price doesn’t bottom out, then a bullish cycle cannot start. When it comes to short-term gains, most traders and analysts have lost hope. However, in the mid and long-term, analysts and investors like the $1 billion hedge fund Pantera Capital, have expressed optimism that the market will recover and set a new all-time high in the next few months, with the fourth quarter of the year expected to bring massive gains.

However, a look at the current downward trend and the low trading volume of the cryptocurrency market, it is very much likely that BTC price would slip again and down to the $5,000 region. The trading volume of Bitcoin has been struggling below the $5 billion mark over the past few weeks.

Back in April, billion dollars cryptocurrency hedge fund Pantera Capital predicted that the bitcoin price will record a new all-time high within 12 months, with their eyes firmly towards the end of the year. Dan Morehead, the CEO of Pantera Capital, stated;

It could be down 50% next week — that’s where it was a month ago. So in any market that’s surging this quickly, we could have a big downdraft. In a year’s time, it’ll be much higher than today.

Morehead was confident that BTC will surpass the previous all-time high which stands around the $20,000 mark.

Institutional investors might fuel the next rally

The bear market of 2014 was similar to this one in that it lasted for a long time and some of the weak investors left the market, which in the end made the market much stronger. The bullish run that followed it was down to retail investors who increased their demand for Bitcoin and other cryptocurrencies.

The bullish run that will follow this bear cycle will either be powered by retail investors or the entry of institutional investors, which could push the market to even greater heights. Retail investors have been expected to come into the market for a while now but the lack of clear regulations for exchanges and other cryptocurrency related services has made it rather impossible.

The entry of hedge funds, banks, and venture capital funds will bring in billions of dollars into the cryptocurrency market, and this is sure to end the bear cycle and lead to the next bullish cycle. Retail investors could also power the next bullish cycle but that will take some time.

Despite all these, there is general agreement in the cryptocurrency world that the prices of these cryptocurrencies would recover in the short or mid-term and the market will embark on yet another bullish run.

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Mike Ben

Mike is a cryptocurrency enthusiasts and writer. The cryptocurrency world has become his primary interest, with movies and books, some of his favorite pastime activities. He's an investor in some blockchain projects; VeChain, Stellar Lumen, Gifto, Cardano, Bitcoin and Cindicator. Mike contributes guests posts to BlockPublisher & can be connected over Twitter or email editor.news@blockpublisher.com

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