The difference between Bitcoin (BTC) has been divided over how to explain the Bitcoin price crash this week, as the pair lost over 35% of their value at some point on Wednesday, dropping $ 30,000 on Coinbase.
Global media explained the decline by China repeating its position in the fight against cryptocurrency, and Tesla suddenly stopped payments in bitcoins for its electric vehicles.
Traders buy on the downturn, causing Bitcoin to bounce back immediately after testing $ 30K. Source: TradingView.
Nikolaus Banegertzoglu, CEO of Global Market Strategy at JP Morgan, noted the steady decline in capital flowing to bitcoin-traded funds. Rotary investment schemes were suspected when institutional investors closed their positions in the bitcoin futures market and redistributed income to create long positions in gold funds.
“It is not clear what drives this transformation,” Banegertzoglu added.
“Institutional investors may leave Bitcoin because they see that the trend over the previous two quarters is over, thus looking for the stability of traditional gold away from the rapid turnover of digital gold.”
However, he mentioned that Bitcoin’s momentum signals remain in positive territory. Therefore, it is too early to talk about the end of the beef market.
Bitcoin dominance awaits recovery
Lennard Neo, head of research at Stack Funds, also suggested a similar bullish setup in the near future, referring to a potential trading plan, but from altcoins to bitcoins.
Lennard pointed to the latest fashion trends in the bitcoin market and their strength in relation to a large group of alternative digital assets, which he calls the bitcoin dominance index. He noted that the net market value of cryptocurrencies has risen by around 40% as Bitcoin’s dominance among digital currencies has fallen from 73.5% to 40.5%.
Bitcoin dominance indicator (blue) versus market value for cryptocurrency (red) Source: Stack Funds
This indicates that many investors are still entrenched in the cryptocurrency markets, mainly focusing on converting bitcoin profits into alternative digital currencies that seemed promising in the short term. Neo added that Ether’s 180% growth so far this year happened late last month due to the same Bitcoin being set to altcoin.
But now the capital wants to return to the bitcoin market, said the former Bloomberg analyst and added:
“We believe that the rules of the game have changed as dark clouds hang in the markets. We expect investors to return to Bitcoin as uncertainty increases as markets go through another reboot. Therefore, there should be a rebound in Bitcoin dominance, which further supports the price of Bitcoin. Temporary “.
Hedge fund veteran and investor Ben Miller has also expressed support for bitcoin’s biting skew, describing the recent downward correction as “a normal decline.”
“If you like something at higher prices, this is a win-win bet that I will enjoy more at lower prices,” said the former investment manager at Legg Mason Capital Management, referring to similar falls in bitcoin prices during the mega bull market 2017.
But bearish concerns continue to outweigh the bullish outlook, especially after Guggenheim chief investment officer Scott Meinerd, who called for a target price of $ 600,000 per bitcoin, was set back by calling the cryptocurrency “tulip mania.”
Meanwhile, Mark Hefel, chief investment officer of UBS Global Wealth Management, called Bitcoin an unreliable asset for value because of its high price volatility. Julius de Kempigne, chief technical analyst at Stockcharts.com, also noted that the recent collapse in bitcoin prices reduced the prospect of a safe haven.
At the time of writing, Bitcoin is trading above $ 40,000, more than 30% above the low session of $ 30,000.