On the evening of the 23rd of February, we saw Bitcoin do yet another dump, but this one is much lower than the previous, and it has reached close to $60,000 for the second time in this bear market. On the previous occurrence, we saw it go below $60,000 but it did not stay there, it just dipped below slightly and trended back up for a few days.
What makes this time different is that the whole market sentiment is bearish, most traders have high belief of it going below $60,000. And on top of that, this move is not as aggressive as the previous one, it is a much better paced down move, which proves that it’s not just high leveraged sellers, but overall seller strength is really big.
We also have seen that many big crypto funds and traders have been closing their positions. Vitalik, the creator of Ethereum has closed $1,500,000 in Ethereum long positions. The only funds that are still actively buying are funds like Micro Strategy, who is buying Bitcoin on a seemingly weekly basis. Large crypto traders are also starting to look for good prices so they can enter leveraged long positions at cheap prices.
Other markets like gold and silver have an effect on Bitcoin, and with gold rallying right now, it is unlikely that we will see Bitcoin do the same. Once we see commodities like gold and silver fall, that will be the signal for Bitcoin to regain. ETF flow momentum has also been slowing down, and it has become very inconsistent.
Over the next few weeks, we will see exactly where Bitcoin is planning to go. That might be far lower than $60,000 or it might be much higher, but the scenario we will see more than likely will be a brief consolidation period. It will almost be like a cooldown, which is long overdue. It might not take more than a year, considering that the next halving is in almost 2 years and historically we have seen Bitcoin make new all-time highs when it gets near the halving. This is just due to the increase in demand for it, and that demand will double as soon as the next halving reaches us.
But just like with anything, past performance isn’t a guarantee for what might happen in the future, so we can only sit and patiently wait for what might happen.
(Just my opinion, not financial advice)