Will Bitcoin continue the current correction?
Last Updated on December 10, 2020
Bitcoin Market Overview
In the past few weeks, many crypto investors and analysts expected the Bitcoin currency to survive and continue to rise above the psychological resistance at $ 20,000, but they had to face a major disappointment this week, so instead of rising, it took a downward correction path and fell into the $ 18,000 area.
Bitcoin is down 6% in the past 24 hours that has seen its price drop below $18,000 for the first time in more than a week but has managed to recover significantly and regain the $ 18300 level as support.
Despite the recent selling, most experts agree that the current weakness is a temporary phenomenon and that the cryptocurrency has good chances to regain the lead at any time, and they also expect that it will maintain its bullish momentum in the long term based on fundamental shifts compared to the situation in 2017.
A more orderly future amid growing interest
It should be noted that the infrastructure, in addition to the regulatory framework that was created, has allowed institutional investors access to the cryptocurrency, during the course of the 2017 hikes, none of these has been achieved, but things are different now.
The future of the regulatory environment for cryptocurrencies has become clearer, especially after the regional and federal authorities in the United States announced several binding rules when dealing with cryptocurrencies, which allowed many companies such as CME Group, Intercontinental Exchange, and Fidelity to provide buying and selling services for cryptocurrencies to investors.
Over the past three years, interest in Bitcoin futures on the CME has reached one billion dollars, and the Grayscale fund backed by bitcoin has increased from $ 200 million to $ 10 billion, among other growth factors is the decrease in the volatility of the leading cryptocurrency. The 6-month volatility index is 1.8 times higher. Only gold, meaning that the currency is gradually getting rid of the main cause of mistrust on the part of major investors, which is its excessive volatility.
Thus, the potential growth of Bitcoin’s market value to $ 1 trillion is just a matter of time, and this may happen in 2021-2022, currently, the total market value does not exceed $ 340 billion, the US Congress’s decision to print another trillion dollars to support the country’s economy during the Coronavirus crisis As a new catalyst for the growth of cryptocurrencies, such a large increase in the money supply will be more than enough to return inflation risks to the market, and thanks to its deflationary nature, the safe bitcoin will definitely benefit from it.
The news is not helping Bitcoin
The increase in the supply of the US currency due to monetary and financial stimulus has hurt the value of the US dollar throughout the year, as the dollar index fell to 90.30 points on Monday, the lowest in more than two years from its highs of 104.00 points last March, by contrast, Gold and Bitcoin gained massive momentum as an inflationary hedge during the year.
However, bitcoin remains a risky asset. Over the past two days, gold prices rose 2.1% amid positive stimulus talks while the currency fell from $19,500 to $18,600 during the same period.
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