Per some analysts, bitcoin may be headed into very bearish territory. As it stands, the world’s number one cryptocurrency by market cap is trading for over $7,200 at the time of writing, but some believe the asset is about to take a turn for the worse and could lose as much as 50 percent of its value.
Bitcoin Could Find Itself Falling Heavily
Bitcoin has already lost thousands off its price in the past two months. In mid-February, BTC was trading for well over $10,300, meaning its current price – while still a major improvement over the $3,800 it hit in mid-March – leaves a lot to be desired. If BTC were to lose more than 50 percent of its value as some analysts are suggesting, the currency could potentially fall back into the $3,000 range.
Nicholas Pelecanos – head of trading NEM Ventures – is one of the few out there predicting a hardcore case of gloom and doom that’s set to strike bitcoin right in the gullet. In a recent interview, he states:
The bulls now must sustain the rally at an equal or greater pace in the short-term or the bears might take back some serious ground. Indicators from one of our momentum-based strategies are beginning to show a serious bearish setup that could lead to a 50 percent selloff, sending the bitcoin price into the low $3,000s.
Pelecanos goes on to say that several technical indicators have appeared on his charts to suggest bitcoin entering a “tanking” formation. He says the 150 and 400 exponential moving averages have been crossed, and that this has only happened twice before in bitcoin’s 12-year history.
This was in conjunction with the 200 EMA crossing the 300 EMA after a price rejection from the 60 EMA, which has signaled the start of a major month-long selloff. Worryingly, both selloffs were sparked by brief selloffs in the Dow and the S&P. Since the beginning of March, bitcoin’s correlation with the S&P and Dow has been unusually high at approximately 0.82.
Naturally, there are figures out there who disagree with Pelecanos or believe he’s taking things a bit too far. One of those figures is Joe DiPasquale, CEO of cryptocurrency hedge fund manager Bit Bull Capital. He recently stated:
The 50-day moving average is putting a lot of pressure on bitcoin’s price and is keeping it under $7,000. However, going from here to the low $3,000s (as indicated in the assessment above) is not the most likely outcome, and we believe there is strong support at $5,000 in the short term.
Let’s Not Rush Things
Kiana Danial – CEO of Invest Diva – offers similar sentiment, claiming:
Based on the Ichimoku system, calling for a 50 percent drop could be a bit premature. We could see drops towards the 50 percent Fibonacci retracement level of $5,976.
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Source: Live Bitcoin News