Is Bitcoin headed for more losses?
Bitcoin’s recovery on Wednesday could very well be temporary, say analysts.
- Bitcoin (USD) climbed nearly 10% on Wednesday (21 July 2021) to recover to as high as US$32,218
- But the recovery could be short-lived, with some analysts expecting more sell-offs to come
- Although short-term traders are feeling the squeeze, BTC could pay off in the long run, said one analyst
- The cryptocurrency crashed 7% at the start of the week, amid concerns over the global economic recovery
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Cryptocurrencies recover, but is there more selling coming?
Bitcoin and other cryptocurrencies recovered strongly on Wednesday, following a brutal sell-off which saw BTC plunge below US$30,000 for the first time in a month.
The world’s largest digital coin clawed back nearly 10% to hit an intraday high of US$32,318 at 01:00 SGT.
However, this recovery could be short-lived, with some analysts expecting more selling ahead.
Kinetic Capital Founder Jehan Chu said the cryptocurrency market’s momentum ‘has stalled and is threatening further reversal potentially below the US$25,000 levels’.
According to Vijay Ayyar from cryptocurrency exchange Luno, bitcoin’s latest drop below US$30,000 could be pivotal, as this means it could fall lower to test the US$22,000 to US$24,000 level.
‘I would see bitcoin between 20-40K (US$20,000 to US$40,000) for a while now before any bullishness returns,’ Ayyar added.
Meanwhile, Delano Saporu, founder of New Street Advisors, believes that the crypto asset will eventually pay off for investors who are in it for the long haul.
‘A lot of people that were speculating when the price was really at its highs and they were jumping in at that time were really looking for a quick profit,’ he told CNBC’s “Trading Nation” programme. ‘They were wrong at that time.’
Why did BTC sink 7% this week?
Between Monday and Tuesday this week, BTC crashed by over 7%, mirroring a massive decline in global stock markets. The Dow Jones Industrial Average recorded its worst day since October 2020.
According to Annabelle Huang, partner at Amber Group, ‘concerns’ about the ‘quality and strength’ of the global economic recovery has led to risk assets across the board turning weaker.
‘Coupled with recent BTC weakness, this just sent crypto market down further,’ she was quoted as saying on CNBC.
Crypto’s fall also followed reports of the New Jersey Attorney General issuing a Cease and Desist Order against New Jersey-based crypto firm BlockFi, ordering it to stop offering interest-bearing accounts.
Bitcoin also continues to be weighed down by China’s ongoing crackdown on cryptocurrency trading, which led to over 90% of bitcoin mines in the country being shut down last month.
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