In seconds, the Bitcoin price has surged from $6,190 to $6,450, by more than 4 percent, after the dominant cryptocurrency remained in the low $6,100 region for more than 24 hours.
The sudden increase in the price of Bitcoin on September 9 was not expected by the majority of analysts and investors in the cryptocurrency market, primarily due to the sheer magnitude of its drop on September 5
Erik Voorhees Comment is Spot on
In previous market recaps, CCN consistently cited the statement of ShapeShift CEO Erik Voorhees, simply because it accurately summarizes the movement of the cryptocurrency market.
On August 25, on CNBC Crypto Trader, Voorhees said:
“I don’t expect it (bear market) to end soon, although I do think that the rate of collapse has slowed considerably. Generally in these bubbles, after you go through several months of a downtrend you hang out in a range for a while… But I think we are done with a majority of the collapse.”
Investors in the cryptocurrency market, especially those that have allocated a significant portion of their holdings into the market, need to consider the fact that cryptocurrencies as an asset class is still at its infancy.
There exists a limited range of institutional products, publicly tradable instruments, and a lack of liquidity that leaves the market generally vulnerable to extreme daily volatility and manipulation.
Over the past seven months, Bitcoin has shown high volatility in the $6,000 to $10,000 region. In April, June, and August, Bitcoin tanked to $6,000 and recovered to resistance levels found at $10,000, $8,000 and $7,000.
Today, on September 9, the price of Bitcoin surged 4 percent from $6,190 to $6,450 within 30 seconds. The dominant cryptocurrency in the global market is vulnerable to major fluctuations and as such, investors should expect 5 to 20 percent drops or surges in value on a daily basis.
The commentary of Voorhees on the bear market of 2018 is important to acknowledge because it is evident that the cryptocurrency market is still on a clear downtrend. But, given the unpredictability of cryptocurrencies, it is difficult to spot the exact bottom.
A viable opportunity for new investors to come into the market would be in the stabilization and bottoming out process, during which BTC shows high stability in the low $5,000 to $6,000 region.
BTC has not fully recovered from the $6,000 support level which it tested three times in the past six months. A proper recovery from the $6,000 region would lead to the initiation of a mid-term rally.
But, the gap between $6,000 and the monthly peak has decreased every time a correction has occurred since February, suggesting that Bitcoin is gradually bottoming out in the $6,000 region.
Where Bitcoin Goes Next
The abrupt corrective rally of BTC triggered by a strong oversold condition demonstrated in the low $6,100 range could enable Bitcoin to find stability in mid-$6,000, which would be benficial for the short-term recovery of the market from a major drop on September 5.
Featured image from Shutterstock. Charts from TradingView.
Source: cryptocoinsnews.com Read more here!