The decline did not surprise many traders, some suggesting a possible test of the $47,000 support level. Although bitcoin has lost its bullish momentum, several derivative indicators, including a bullish futures premium and a neutral skew, suggest that the price may not fall below $50,000.
4 hour chart BTC/USDT. Source: TradingView
Although technical indicators paint a mixed picture for bitcoin’s short-term price movement, the asset remains strong fundamentally. Today the media reported that sovereign wealth funds have started opening positions in BTC. This shows that BTC and the cryptocurrency sector in general are becoming more prevalent worldwide, while new Ether Trusts (ETH) are also being established to serve institutional investors.
Analysts suggest the market is oversold
Glassnode co-founder and CTO Rafael Schultze-Kraft recently noted a possible price drop to between $51,100 and $54,000.
Not much #Bitcoin included, between that and $51k. I wouldn’t be surprised if we dive in a little deeper.
The strongest support on the chain is currently at $47,400. https://t.co/3GFPTQPp6F pic.twitter.com/NLBQvEIGfB
– Rafael Schulze-Kraft (@n3ocortex) March 22, 2021
In a follow-up tweet following Thursday’s decline, Schulze-Kraft confirmed that the drop was not unexpected and that he believes the overall outlook remains bullish.
Schulze Kraft said:
Structurally, nothing has changed. I have yet to see a data point indicating a prolonged bear market.
Another indication of a possible short-term trend reversal is the evolution of bitcoin’s liquidity, which has seen the biggest drop in more than 6 months.
Bitcoin liquid supply exchange. Source: Glassnode
This suggests that a large amount of BTC has been withdrawn from circulation and placed in long-term repositories as bulls prepare for a price increase.
Altcoins drops below
Most altcoins were hit hard by bitcoin’s selling spree, with traders across the market cancelling positions to hold onto their recent gains.
Daily indicators for the crypto-currency market. Source : coin360
Aragon (ANT) stands out among altcoins, whose recent shift to DeFi and non-fungal tokens contributed to a 50% increase to $13.56.
Holohain (HOT) and Balancer (BAL) were also up 5.2% and 6.4% respectively.
The total market capitalization of cryptocurrencies is currently $1.62 trillion and bitcoin dominates with 59.4%.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and every transaction involves risk. You should do your own research before making a decision.
frequently asked questions
Why has the price of bitcoins dropped so much?
1. Funding Stress. … So there was always the risk of a reset of funding. According to data source Coinalyze, the price drop has so far eliminated more than $300 million in bitcoin longs – about 30 percent of the total $1.33 billion in liquid longs in the crypto market.
Will the price of bitcoin fall after it halves?
A few weeks later, bitcoin rose again, leading to an impending halving. … But if historical patterns are to be believed, cryptocurrencies can experience a temporary drop in price after a supply change.
What happens to the price of bitcoin if it is split in half?
The halving of bitcoins occurs when the reward per block, or the number of bitcoins circulating when a block is produced (approximately every 10 minutes), is halved. … This supply effect increases the scarcity of bitcoin, which has historically driven the price up.
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