The cryptocurrency market did not fully recover yet. Prices have definitely consolidated for the past few days, leaving renewed hope for a potential rebound. On the other hand, some analysts are predicting a further drop in Bitcoin prices specifically towards 20K. Will Bitcoin price drop further? What factors contribute to the extended downtrend of Bitcoin? Let’s analyze.
What is Bitcoin Crypto?
Bitcoin is the first cryptocurrency. Its inventor, the pseudonymous Satoshi Nakamoto, described it in a whitepaper as far back as 2008. It was ultimately launched in early 2009. Bitcoin is limited to 21 million coins. This is achieved by shrinking inflation that is halved approximately once every 4 years. Bitcoin is still the king among the cryptocurrencies, having the highest market capitalization and hashrate. It is considered to be the digital gold and the reserve currency of the crypto industry.
Where will Bitcoin Price reach in case of another Crash?
Bitcoin did not have any support/resistance areas when it broke the $20,000 price mark back in December 2020. Prices directly jumped from $19,000 to $60,000 without any adjustment. Looking at figure 1 below which is a monthly chart of Bitcoin prices in USD, we can see how prices went on a strong uptrend. This nonstop increase was fueled by heavy buyers from one side, and from mainstream media jumping on the crypto bandwagon.
Today’s adjustment comes with no surprise to experienced traders and investors. The obvious next support for Bitcoin prices is the strong psychological price of $20,000.
What factors will make Bitcoin price drop further?
There are many factors that can contribute to Bitcoin reaching $20,000 again:
- Heavy selling pressure: When investors panic, they tend to directly liquidate without assessing the situation
- Negative news: be it from the mainstream media, from influential people, or from countries…the whole world is waiting for any kind of news.
- Weak buying power: This comes usually from uncertainty in the market and lack of any positive news
- Failing crypto projects: When Terra collapsed, many investors started to doubt decentralization and created a selling pressure
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