Bitcoin is still in a bear market with its price stable in the mid-$6,000 range. While the majority of experts see the price of the dominant cryptocurrency recovering in the months ahead, one investor sees Bitcoin price going down to $3,000.
Anthony Pompliano, a widely recognized face in the global cryptocurrency community and the founder of Morgan Creek Digital better known as “Pomp,” recently stated in his daily newsletter, Off The Chain, that he personally sees the price of Bitcoin suffering another 50 percent loss in the short-term before ultimately recovering to $10,000. Pomp wrote:
“The final data outputs left me with a few uncomfortable conclusions. The most notable one is that we are likely to see Bitcoin near $3,000 before we see Bitcoin at $10,000 again. If this is true, that means we still have ~50% price decrease to go. Things may get really, really ugly if this happens.”
Technical Analysis Suggests Otherwise
As CryptoSlate reported last week, Bitcoin has achieved a 14-month record low monthly volatility rate in August 2018, as its price remained stable in the $6,300 to $6,700 region for around three weeks from Aug. 6 to Aug. 26.
In an interview with CryptoSlate, Mati Greenspan, a senior market analyst at major multi-asset trading platform eToro, said that the stability of Bitcoin is a positive sign of long-term growth, as it will contribute in the formation of a strong foundation to support the next large mid-term rally.
Most investors in the market including ShapeShift CEO Erik Voorhees have shared a similar sentiment, adding that while the bear market is still in play, the low price range of Bitcoin presents a decent opportunity to accumulate the dominant cryptocurrency. Voorhees said on CNBC Crypto Trader,
“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.”
More importantly, technical indicators like the GTI VERA Convergence Divergence Indicator that have been successful in spotting major trend reversals in the past have demonstrated strong oversold conditions in the market, signifying a buying opportunity.
The last time the GTI Vera Convergence Divergence signaled a trend reversal, the price of Bitcoin jumped 39 percent, as Bloomberg reported.
But, Pomp did emphasize in his letter that the model he has incorporated in forming the $3,000 short-term price target for Bitcoin was not based on technical analysis or market indicators. Pomp explained,
“Obviously I can’t promise the model I’m using is accurate, nor can I promise that my conclusions will stand the test of time. In fact, I was wrong just 9 months ago so everything I say about price targets should be taken with a grain of salt. Nothing I do professionally requires me to read charts, understand price movements, or predict future potential — this is probably a good thing.”
2014 vs 2018
Some investors like Pomp have evaluated previous corrections in Bitcoin’s history and compared their multiple year corrections to the 2018 correction. While it is accurate that Bitcoin has entered a major correction in January 2018, more technical analysts like Willy Woo have said that the correction of Bitcoin in 2018 is significantly healthier than its slump in 2014.
Woo raised an important point about the dominance of the now-defunct cryptocurrency exchange Mt. Gox over the global cryptocurrency exchange market when it processed 90 percent of all Bitcoin trades.
The cryptocurrency exchange market has matured exponentially since then with companies like Coinbase, UPbit, Bitfinex, BitMEX, Binance, Huobi, OKEx, and many more competing against one another to remain at the forefront of cryptocurrency adoption.
Another view on a long recovery. Worth bearing in mind ‘14-‘15 was detoxing from a MtGox collapse; traded 90% of world volume. Plus 1/8 of all BTC stolen plus Willybot pumping prices. Systemically, Bitcoin 2018 is much healthier than Bitcoin 2014. https://t.co/VFrBsU9ND1
— Willy Woo (@woonomic) August 18, 2018
It is certainly possible that the Bitcoin price falls and stabilizes in the lower price range before rebounding to $10,000 and major resistance levels beyond that. But, as Voorhees and Woo suggested, the worst part of the Bitcoin correction is most likely over, as evidenced by most technical indicators that suggest strong oversold conditions.
Cover Photo by Ivana Cajina on Unsplash
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