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Bitcoin Drop Under $7,000 “Normal Behavior”: Nothing is Out of the Ordinary

Capitulation is upon the cryptocurrency industry once again. Over the past seven days, the price of Bitcoin has collapsed by over 15%, tumbling under $8,000 and $7,000 as bears have managed to assert control over the entire market.

Understandably, this recent price drop, which comes just a month after a 42% spike in a single day, has pushed bulls to their breaking point. In fact, one notable trader on Twitter, Bitlord, said that he has quit Bitcoin trading due to the recent tumult in the market, marking a clear sign of capitulation.

Red Crash Price Crypto

Even still, there remain some analysts that are keeping their heads up high. One such analyst is PlanB, a European institutional quantitative analyst that has formerly delved into Bitcoin analysis. He recently argued that per his famous price model, Bitcoin remains on track for long-term price growth. Here’s why.

Bitcoin Drop Par for the Course

PlanB noted in a recent tweet that went semi-viral that while people are panicking about the 15%+ drop seen over the past week, the plunge was just “normal Bitcoin behavior”; indeed, if Bitcoin can rally 42% in a single day, the cryptocurrency can easily drop 17% within a week and remain in “normal” territory.

He further tried to reassure bulls by reminding his followers that Bitcoin remains up 100% year to date, having bottomed at $3,150 in December 2018 and surged to $14,000, then retraced to $6,700.

And to put a cherry on the cake of his argument, PlanB concluded by noting that the recent drop remains in the confines of the Root Mean Square Error band of his stock-to-flow model, which predicts Bitcoin’s price by factoring in the BTC inflation rate. To put it in simpler terms, Bitcoin’s recent drop doesn’t invalidate a price model that could have accurately forecasted the cryptocurrency’s price growth for a majority of its history.

Long-Term Trend Inact

That’s not the only sign that Bitcoin’s long-term growth trend remains intact, despite the bearish price action.

Digital asset manager Charles Edwards recently noted that Bitcoin’s price action seen earlier this year, which was marked by all-time high exchange volumes, and the subsequent consolidation are indicative of a long-term bull trend forming.

More specifically, he stated that during the previous market cycles, Bitcoin trading sessions with all-time high volumes that were followed with consolidation always led to “huge rallies” months and years later. This was the case in at least three scenarios Edwards singled out. So if historical precedent is of any current relevance, Bitcoin might be about to explode higher yet again.

Also, popular cryptocurrency trader FilbFilb recently remarked that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross.” As Filb’s chart below depicts, the last time the 50-week crossed above the 100-week, Bitcoin rallied for months straight, surging to fresh highs month in, month out.

That’s not to mention that the macro narrative is supporting the cryptocurrency market, or rather, the need for a new form of money in general; legendary hedge fund manager Ray Dalio recently confirmed that he thinks that there will be a “paradigm shift” in the economy, as the capitalistic machine just isn’t working for everyone anymore.

Dalio, in fact, said that he thinks the “world is broken.” The Wall Street legend did not mention Bitcoin, though many took his rhetoric as a positive sign for a new form of money, a new economy.

The post Bitcoin Drop Under $7,000 “Normal Behavior”: Nothing is Out of the Ordinary appeared first on Blockonomi.



Source: Bitcoin Drop Under ,000 “Normal Behavior”: Nothing is Out of the Ordinary

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