Having traded at $10,000 less than two months ago, the price drop that Bitcoin experienced amid the outbreak of the Covid-19 virus and its impact on all the global markets was gut-wrenching. Bitcoin, having climbed well through all of January and into February dipped twice before bombing out to $3,700.
This fall was catalysed by the impact of the Covid-19 virus on the global economy and markets and the coin fell in line with stock markets and commodities. It was surprising how correlated the Bitocin market appeared to be with the traditional markets, but that was more to do with institutional money leaving the investing arena.
What was more expected, and in line with Bitcoin, was the volatile bounce back in gains as Bitcoin climbed nearly 90 percent from that low point to nearly recouping all of the lost gains. The price of the coin is a little lower than that now — trading around $6,300 — but the good news is we may have seen the bottom.
The Covid-19 fears still hover around the markets, but in the Bitcoin space, things are a little more positive and for Tone Vays, he does not expect the price of the coin to go lower than $3,700 in this time of increased financial uncertainty.
What happened to $2,800?
Prior to the massive market collapse, Vays had said that he expected a logical bottom for Bitcoin would have been $2,800 — he calculated this as 20 percent of the high seen in 2019. However, After March 12, when BTC’s price bounced off 15-month lows of around $3,700, Vays has changed his tune and thinks that Bitcoin will not return to lower levels.
“I don’t think it’s likely anymore,” he said. “Because I think this incident, this event earlier this month was close enough $2,800 that I’m no longer expecting $2,800.”
Vay’s theory on why the $2,800 mark was not reached in that rapid fall is an interesting one and pertains to Derivatives giant BitMEX. Vays suggested that $2,800 could have appeared during the latest collapse if it was not for the crashing of BitMEX which prevented it.
“If BitMEX did not go down, we probably would have $2,800 and maybe even lower,” he said. “It’s very possible that if BitMEX didn’t crash, the selling would have just accelerated, but right now, I’m under the assumption that the low is in.”