4 real reasons for a possible bitcoin reversal
The nature of any collapse is the impossibility of predicting the fair value of a resource. Society still has not learned the lessons of the "tulip fever" that happened in Holland almost 400 years ago. And now, centuries later, we have seen The cryptocurrency bubble deflated on 70%.
Throughout the day, from all sorts of sources of information, with the exception of the pigeonhole, there are comments from experts. And everyone thinks it necessary to come up with a price scenario for bitcoin reversal.
At the same time, no objective basis for such estimates is given. At best, such assumptions are based on technical analysis. At worst, they are based on hope. So, are there any real factors to stop the free fall of bitcoin and other cryptocurrencies? Let's try to find out.
Factor 1
Traders using technical analysis will like to hear that a moving average with a period and 200 on the weekly timeframe can help stop panic around the 3000 levels.
The SMA is used by many market participants, so they are unlikely to refrain from trying their luck once again.
Factor 2
Not so ambitious are supporters of the price action approach in trading financial instruments. If we turn to the Bitfinex exchange volume profile, we see an interesting fact: during the period from May 2016 to May 2017 the most transactions took place in the price channel $500-1200.
Using this information, investors can regard this range as a benchmark for the #1 cryptocurrency's fair value.
Factor 3
It's no secret that one of the main reasons for the collapse of the digital cash market was the enormous volume of trading in futures contracts on the BitMex exchange. Traders speculate on these contracts with the possibility of using leverage of 1 to 100.
These conditions led to an influx of clients, but practice shows that such enterprises often fall under the supervision of government agencies. Until this has happened, one cannot ignore the influence of trading statistics from BitMex.
If you take into account the fact that it only takes 1% of its value to buy 1 bitcoin, then the cited volume of transactions in 24 hours worth $6.1 billion could be $61 million, which is comparable to the results of 38-39 places of coinmarketcap.com.
In addition, a decrease in trading volumes on BitMex may also affect the situation. Sooner or later traders will start to lose money on short positions, as the market will lose directional dynamics.
Factor 4
There is an opinion that institutional investors will save the cryptocurrency market. Allegedly, they are already creating special trading floors and preparing laws for them. This is an unfounded judgment, because the volatility of cryptocurrencies would not allow a reasonable investment fund to risk clients' money like that.
On top of that, managers can go to jail for such risk appetite. However, the likelihood of institutional participants in the crypto market should not be denied at all.
Such companies do not like to lose money and will actively hedge your risks - which without options, futures and other derivatives is almost impossible.
Therefore, the indicator of the emergence of really big Wall Street players in the industry will be a steady increase in the volume of futures on the CME and CBOE.
We hope that these factors will help you to make the right decision and not to lose money.
Read also
https://mr-trader.com/bitcoin-cryptocurrency/bitcoin-today/3000-sderzhit-prodavcov-bitkoina