As many traders have likely witnessed by now, bitcoin has endured a harsh period of struggle as of late. The currency was initially trading for just over the $12,000 mark at the end of August but has since lost about $2,000 off its price to fall into the low $10,000 range.
Has Bitcoin Really Been Falling Hard?
It’s a sad time for many bitcoin enthusiasts, though there are several analysts out there that think the recently bearish trends affecting bitcoin aren’t that bad. Even though many negative points have been reached – i.e. $7 million of long positions and $8 million of short positions were liquidated on exchanges like BitMex – bitcoin is still strong in many individuals’ eyes, and they are not ready to give up on the world’s biggest cryptocurrency just yet.
One of these positive thinkers is someone named Su Zhu, the CEO of fund management company Three Arrows Capital. In a recent interview, he stated:
I am flabbergasted by the strength shown at $10K, and it probably means $100K is more likely than $5K at this stage.
He commented that bitcoin, despite falling into the high $9,000 range for a brief period, has really defied everyone’s expectations and shown great resilience and strength. It immediately rose into the low $10,000 range the following day and has managed to remain there ever since. In fact, bitcoin has even incurred small gains since then, spiking from around $10,100 to $10,400 just today.
Perhaps bitcoin is meant to remain at $10,000 for the next few weeks or months. Either way, this number still falls within the five-figure range, and places bitcoin at a much stronger level compared with where it was just last year. The currency ended 2019 at a rather measly $7,000, and while we still have more than three months left in 2020, the asset is still miles ahead of where it stood just 12 months ago.
In addition, bitcoin really has the “dip effect” going for it, according to Zhu. The CEO stated that many analysts and long-term traders expect bitcoin to incur heavy drops of around 30 percent or more once it experiences a major rally like it did just a few weeks ago. This doesn’t necessarily worry them. Rather, they use the opportunity to buy up new bitcoin units at considerably lesser prices, thereby building both their stashes and bitcoin’s support levels.
The Dip Effect… Is in Effect
New buyers and new transactions potentially bring bitcoin back up to where it stood originally, making the dip in question a thing of the past. On Twitter, Zhu explained:
Markets typically retrace one third or more in a bull market after local euphoria.
So, granted BTC has fallen by about $2,000 as of late, perhaps enough people will get involved in the buying phase to bring BTC back up to where it once stood.