Is Bitcoin's Price Correction A Healthy Dip or a Warning Sign?

in LeoFinance5 months ago

I think that the recent Bitcoin price correction, which saw the cryptocurrency slide below $66,000, is long overdue. The market was getting too comfortable due to the steady rise and, no doubt, a correction was definitely called for. It seriously took a toll on crypto prices. The most affected was Ethereum. It's typical market volatility, and investors must prepare themselves against such quick moves.

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In my view, filling short positions from $67,000 to $70,000 reflects a sense of caution in the mindset of investors. A continuous rebound may further squeeze the shorts and bring added momentum into the market, which could propel Bitcoin through the crucial resistance levels of $70,000 and $72,000. However, I believe that one needs to monitor Mt. Gox settlements, which still have the potential to influence the markets in tandem with such events. So far, it would seem recipients are opting to hold their recovered coins, but this may change at any moment.

I'm also interested in what the U.S. government has been doing lately with its holdings in Bitcoin. Just recently, a large amount of BTC was transferred from an address belonging to the seized funds of Silk Road, a development that begs the question as to whether the government was looking to sell or hold some tokens: what could be a pointer that more and more central governments are becoming active, not passive, wallet holders within the crypto market, promising implications of both kinds.

Market conditions are still favorable to Bitcoin.

Technical indicators show there is much runway left for further appreciation, and the growing interest of developed nations in holding BTC as some reserve asset signals a bullish case. I also feel that anticipated cuts in interest rates, coupled with increasing institutional adoptions, will surely help keep up the trajectory of the cryptocurrency. However, I remain vigilant regarding the impact the U.S. national debt could have on the market. The staggering level of $35 trillion debt could mean increased inflationary pressures and eroded confidence in traditional fiat currencies; to me, these are both positives for long-term Bitcoin.

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I do not think there will be any additional crypto ETFs any time soon, according to BlackRock. The obvious market leaders are Bitcoin and Ethereum, and some considerable time has to elapse for the other digital assets to catch up on the threshold expectations from investment giants. Of course, it is important to keep a very close review of what happens in this space moving forward and adjusting our strategies accordingly.

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