The recent correction can be good for Bitcoin: Here is why
Bitcoin has undergone a dramatic sink from 59,258$ down to 53,625$, which was nearly 8%, after WHO declared a new covid-19 variant called Omicron on 26th November. One week later, BTC price slumped to close $42,000. Investors and traders were anxious and the fear and greed index reached the lowest level. However, this correction can be good for Bitcoin! What is the reason? Let’s find out with Tokenize Xchange.
Bitcoin Price went down dramatically
The ‘Omicron’ strain, which has been found in South Africa, Botswana, and Hong Kong, has a peculiar combination of mutations. According to scientists, which could let it dodge immune responses, become more transmissible, and potentially be vaccine-resistant.
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The number of positive testing results has risen in South Africa and rapidly spread out to other continents including Europe, Asia, and America. But the virus toxicity is still under research.
Fears of increased lockdown limitations have arisen as a result of the spike in the number of infections related to the new type, which has a painful impact on economies. The spread of omicron, particularly to other nations, might further dampen investor enthusiasm.
Altcoins, which usually move in a similar trend with Bitcoin, also dropped. Etherum, the second-largest cryptocurrency by market capitalization, fell 11.6 percent to its lowest level in a week. The other top 6 largest cryptocurrencies suffered the same pain, Binance coin, Solana and Cardano declined 13.9, 14.9, and 13.8 percent respectively. The reason is that investors are fleeing risky assets in favor of the perceived safety of bonds, the yen, and the dollar.
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However, the current market dip could be considered a good opportunity for traders to invest.
The recent correction is necessary
Although bitcoin has seen a significant sell-off since strain B.1.1.594 was announced by WHO, the BTC price has always remained above $50,000. This could be considered as a price correction, so the cryptocurrency market is still so far from “crypto winter”.
A correction, which is currently taking place, is a good sign. Prices are falling and people are selling their coins, but the rate at which this is occurring is appropriate given how quickly prices increased. At some point, a balance between buyers and sellers will be reached, and growth will resume, hopefully at a more manageable pace, unless there is more bad news.
A hard support line at over 50,000$ means investors still have faith in the bright future of bitcoin. Some corrections like this are the signals of a healthy market and traders should be thankful because it’s a good time to stock more coins.
However, if there are any unexpected stressful events that impact bitcoin and break the support line, BTC price will possibly drop to $42,000 or even $30,000. Be careful!
Bitcoin is heading to 100,000$
Some in the crypto business, who are used to crypto values moving independently of equities and traditional assets, were extremely surprised by the crypto sell-off this week, which saw the bitcoin price decrease in line with traditional markets. However, cryptocurrency sometimes still follows world main events. In this case, Omicron hits a powerful punch in the world economy, which is currently trying to recover after the pandemic of the covid-19 delta strain.
The price of bitcoin skyrocketed in 2021, reaching $63,503 per bitcoin before plummeting to $29,807 in July. Since then, bitcoin has soared, reaching a high of nearly 69,000$ on 10th November.
Just like gold, Bitcoin provides a safe solution to fight against inflation, especially during the time when the demand market is extremely chaotic due to the impact of the pandemic. In fact, it is proved that bitcoin and other cryptocurrencies played a good role in investment diversification besides stocks, bonds, and gold. More and more traditional investors are interested in bitcoin despite the rising number of covid-19 infections.
Bitcoin is now trading around the level of 54,000$, but market analysts believe it will reach 100,000$ in the next few months.
Bitcoin’s unusual combination of defensive competence and speculative appeal makes it more future-proof than many other asset classes today, opening the door to reach 100,000$ and or even more. How about you? What do you think about Bitcoin’s future? And don’t forget to keep following Tokenize Blog!
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