Bitcoin is trying to recover

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Over the past day, bitcoin has dropped slightly in price by about $1,500. In general, trading continues between the levels of $42,000 and $31,000. So far, it is very difficult for Bitcoin to start a new round of upward movement, and what are the fundamental reasons for this? From our point of view, none. The fundamental background remains extremely weak, because all the problems that led to the collapse of bitcoin by $36,000 have not gone away. China still wants to ban mining, in the USA everyone also wants reporting on each operation over $10,000, and Elon Musk still does not know what he wants from bitcoin and why he is commenting on it at all. So, it turns out that the market is currently waiting for news, waiting for new statements by Elon Musk, waiting for someone authoritative to suggest what to do. Over the past year, the markets have become overly confident in Bitcoin and in the fact that it will grow almost constantly. Perhaps this will be so in the long term, but recall that after the two largest upward trends in 2013 and 2017, 2-3-year downward trends followed, during which bitcoin lost up to 90% of its value. However, it will be really easy for bitcoin to fall in price in the next couple of years, for example, 6.5 thousand dollars per coin. After all, it managed to fall in price over the past month and a half by $36,000, losing 56% of the cost. Thus, a couple more news from China and the rate may collapse down even more. The most important thing is that for some reason none of the large investors and institutions is running to save Bitcoin. In cryptocurrency circles, there is an opinion that at this time there are a lot of "whales" and institutions on the market, in contrast to previous trends, when most of the investors were retail and small, therefore, Bitcoin now cannot collapse down the way it did in 2014 and 2018. However, as practice shows, it may do so, since large investors also do not want to suffer losses, and bitcoin, like everyone else, is considered as an investment tool. If the instrument is not profitable, you should get rid of it. But not everyone bought bitcoin at a price below $30,000 per coin. There are those who have invested at around $50,000 or $60,000. Thus, in general, we believe that the Bitcoin upward trend is indeed over. Most likely, for several months, "digital gold" will try to restore the "bullish" trend, and there will be consolidation for several months, after which more and more investors will be disappointed in the prospect of new growth of bitcoin and sell it. The profitability of mining will also decrease, which will reduce the production of new bitcoins.

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In technical terms, bitcoin dropped twice as close as possible to the $30,500 level and both times failed to consolidate below. Thus, now we are counting on the rise of bitcoin quotes to the critical line and for a certain period of consolidation. Roughly speaking, the market needs to calm down now. Nevertheless, if the bitcoin quotes manage to gain a foothold below the $30,500 level, then the token's depreciation may continue.

The material has been provided by InstaForex Company - www.instaforex.com

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