The hash war related to the Bitcoin Cash hard fork ended. Elsewhere, the US Securities and Exchange Commission (SEC) hasn’t announced any charges against cryptocurrency or initial coin offering firms in the last few days. However, even though these negative fundamentals faded away, Bitcoin is still pointing down, at this time being pushed by technical indicators. It seems that the largest and oldest cryptocurrency cannot find its bottom.
On Dec. 6, Bitcoin was trading dangerously close to the recent multi-month low at $3,605, according to Coinmarketcap data. Currently, BTC is fluctuating at around $3,600, and the downtrend might continue.
November was the worst month in seven years in terms of percentage losses for Bitcoin. However, it seems that the worst is yet to come as the technical indicators are not optimistic for 2019.
Mike McGlone, an analyst at Bloomberg Intelligence, said on Wednesday that the BTC price could continue to fall to the support level at $1,500, which is a scary but realistic scenario. He said that the rest of the cryptocurrencies would also weaken, which is obvious, given that the majority of coins tend to follow the mood of Bitcoin.
If McGlone’s prediction becomes a fact, it means BTC is about to drop another 60% from the current level after falling by about 80% from its record high.
“There’s little to prevent fading Bitcoin prices from reaching the continuous mean of $1,500,” the Bloomberg analyst said.
McGlone noted that many investors are in a hurry to sell their Bitcoin holdings, also because of year-end tax purposes. He added:
“We’re at a classic psychological stage where the market is reversing the 2017 frenzy. The hard fork was a key trigger that signaled the technology is way too nascent. You had these dicey characters threatening to destroy each other and institutions said ‘It might be best if we stay away from this for a while.”
At the end of November, Stephen Innes, head of Asia-Pacific Trading at Forex broker Oanda, said in an interview with Bloomberg that Bitcoin might drop to $2,500, noting that it hadn’t touched its bottom yet.
While Innes remains positive on blockchain – the technology underpinning Bitcoin – he expects investors to stay away from buying more coins given the current uncertainty and bearish sentiment.
“What I’m really looking at here is the way coins have been trading over the last few months. It’s indicated that the bottom is not in so therefore I don’t think any mature investor is willing to catch this falling knife,” Innes stated.
“And that tells me there is more room to go and as soon as we hit some of these key round figure inflection points like $3500 and $2500, the psychological impact will weigh on more inexperienced traders,” the Oanda executive added.
The situation is dramatic for both retail investors and miners, as the latter ones don’t find it profitable to mine Bitcoin anymore. Many institutional investors are also hit by the current market crash. 2018 is the only one in the last seven years to be unprofitable for any investment made on the first day of the year. Thus, for each $1,000 invested on Jan. 1, 2018, investors remain only with about $318, which represents a 68% loss. If the same amount would have been invested in the first day of 2011, it would have brought over $4 million in profits by the end of the year. Despite anything, many investors suggest that now it is the right time to buy, as the price of Bitcoin comes at a significant discount. Ironically, Bitcoin’s bearish trend came in the month of Black Friday.
While it’s difficult to know where BTC’s bottom is, it becomes evident that speculators are leaving the market right now, and it’s maybe a rare opportunity to enter long positions despite the bearish trend.
Ric Edelman, founder and executive chairman of Edelman Financial Services, called on investors to buy Bitcoin when it’s cheap. He recently told CNBC:
“People were thrilled to buy bitcoin at $19,000 last year. Those same people don't want to buy bitcoin at $4,000.”