It has been a bit of a sad time for the Bitcoin market as the coin fell towards the $10,000 mark after pushing beyond $12,000 and even eyeing $13,000. Traders are worried that if the coin falls below the important $10,000 a bearish trend could develop.
However, the outlook in the medium term for Bitcoin is still quite positive according to some prominent market commentators. The bearish sentiment felt in this $2,000 fall has a feeling of being short lived and the fact that the coin settled above $10,000 — and is climbing — is a good sign.
Part of a healthy market
The movement of Bitcoin from the ranges of $9,000, where the coin got stuck for a long period of time, to pushing for $13,000 was rather rapid. This is something that always precedes a pull back and this is something that is actually considered healthy.
Speaking to Cointelegraph, Dennis Vinokourov, the head of research at crypto exchange and institutional brokerage provider BeQuant, explained:
“The aggressive unwind of crowded positioning related to DeFi assets” could have contributed to the decline. However, other factors like whales taking profit, miners selling off their stashes, and a major South Korean exchange Bithumb reportedly being raided by police all might have applied selling pressure on Bitcoin. Hirsch emphasized that in periods of low volatility, price drops can be intensified when fewer traders are in the market”
“Mining pools are moving higher than usual volumes of Bitcoin onto exchanges while looking to cover their overheads, and investors have recently been more reserved (even for the usual summer lull). Lower volumes mean volatility, and price drops can be more drastic than they normally would be during heavier trading sessions.”
Vinokuorov also added that the pullback could benefit Bitcoin in the months ahead, as price rejection is not a negative occurrence if the market were to calm down as a result.
“Price discovery and consolidation following a strong run up is an indication of a healthy two way market flow. Price rejection is not necessarily a bad development, as it gives market participants an opportunity to take stock of the situation and look to align the interest of both leveraged/speculative flow and those of long-term holders.”
Looking longer term
The real aspect of Bitcoin that people are keeping their eyes on is how Bitcoin will move in the longer term. Bitcoin has been quite range bound in the past long term period, but there are factors that could push the coin up over the years to come.
Guy Hirsch, managing director of eToro trading and brokerage platform, said:
“I do believe that this bearish sentiment is short-term, and there are some positive developments that support BTC’s continued growth, such as the Fed’s policy of near-zero interest rates for the considerable future.”