Bitcoin Bubble Was Imminent, Bitcoin Price Drop Deepens, But Recovery Nears
In a period of seven days, Bitcoin price surged from $1,900 to $2,700. In some regions such as South Korea, Bitcoin was being traded at around $4,000. Analysts predicted that a bubble was imminent and that a correction would have to occur.
On May 27, Bitcoin price declined by $500 from $2,500 to $2,000, recording its first sharp since the beginning of May. The next day, it continued to fall.
Over the past month, Bitcoin investors and traders have enjoyed the meteoric rise in Bitcoin price. Based on global average price provided by several cryptocurrency market data providers, Bitcoin price increased twice: from the $1,300 region to $2,700 at its peak. On a monthly basis, Bitcoin has recorded a 35 percent gain.
Based on various measures, including demand from investors, trading volume, an irregular increase in price and search trends, analysts including angel Bitcoin investor Trace Mayer predicted Bitcoin’s fourth bubble earlier this week.
— Trace Mayer (@TraceMayer) May 25, 2017
James Wang, an analyst at ARK Invest and former researcher at Nvidia, also raised a similar point to Mayer, expressing his concern over a bubble building up in the global cryptocurrency market.
Wang explained that Bitcoin’s recent price surge to the $2,500 region also led to 10x gains for alternative cryptocurrencies (altcoins), which encouraged casual traders and investors to enter the cryptocurrency market.
“Seeing that Bitcoin has crossed $2,500 and other tokens have gone up 10x, every aunt, uncle, and teenager rushes in, pushing total crypto market valuation over $100 bln. As optimism reaches fever pitch, the smart money exits. With new buyers exhausted, the markets unravel faster than non-nitrous oxide establish foam.”
However, Wang’s description of early sellers of Bitcoin as “smart money” is inaccurate. As Koji Higashi, a Japan-based analyst and IndieSquare co-founder previously explained, “not-so-smart” money has fueled both Bitcoin and altcoins in Japan, South Korea and other regions.
Investors who have entered the cryptocurrency market for short-term gains shouldn’t necessarily be described as “smart money” and smart investors.
“Newly entering Japanese investors are driving this great altcoin bubble and not-so-smart money is flowing into space especially into some altcoins at a rather concerning rate,” said Higashi.
As it did in 2013 and during three other bubbles, Bitcoin price will likely recover soon. In 2013, it took a period of five to six days for Bitcoin to recover.
via Cointelegraph.com News http://bit.ly/2oVAvne
May 27, 2017 at 01:14AM