On January 9, Bitcoin dropped $250 in thirty minutes, taking everyone by surprise. The currency traded around $3,800 for a day, but even this couldn’t hold. Earlier today, Bitcoin lost another $160 to trade just above $3,650. A brief fightback saw the currency get back over $3,700, but the rally was shortlived. At press time, Bitcoin was trading at $3690. On Coinbase Pro and Bistamp, the currency was trading below $3,650.
And the short-term future doesn’t look too promising for investors, at least not according to Vinny Lingham. Lingham is the CEO and founder of Civic, a blockchain identity management platform and a prominent crypto markets commentator. In a recent interview, Lingham stated that he believes Bitcoin will test $3,000 soon, and might even breach it. His remarks come two months after he warned investors against investing in Bitcoin before it reclaims $6,000.
Nothing to Smile About
Just 11 days into the new year, Bitcoin set a new low for the year at $3,654. Previously, it came closest at $3,711 on January 1 but it rallied swiftly to trade at $3,900 the next day. Now, it seems like the push that began with the new year is starting to fizzle out.
Despite the price dip, Bitcoin’s 24-hour trading volume is at its highest since Christmas. At press time, the volume stood at $5.9 billion, up by over $1 billion in the past two days. At some point earlier today, the volume hit the $7 billion mark.
The high volume could be a mixed bag for the market, however. On the one hand, it could indicate a vibrant market where more traders are taking part in the market. On the other hand, it could signal a rush by investors to sell their Bitcoin stashes in the belief that the market could drop even further. And looking at the market, the latter is more likely than the former.
When Bitcoin suddenly dropped from $4,060 to $3,850 yesterday, the volume spiked by $800 million. And as Bitcoin dropped further, the volume rose higher, a worrying correlation for the market. The number of sellers who were panic-selling could have been the reason Bitcoin hit $3,650 earlier today. At $3,650, Bitcoin’s trading volume stood at $7.1 billion.
Bitcoin to Test $3,000 Soon
Bitcoin is at a very crucial point, Lingham believes. For the next month or two, it’s likely to trade sideways between $3,000 and $5,000. After this period, Bitcoin will either shoot up or crash, he stated in an interview.
The market is definitely trying to find a bottom, and I don’t think we’ve found one yet. The reality is it will probably trade sideways between $3k and $5k while it’s trying to find which way to go, and when it finds direction, there will be either a breakout or a breakdown.
Lingham also stated that he believes that the sideways trading does more harm than good to cryptos. This kind of market leads to a selloff by many traders who fear that the market could dip. This consequently leads to the price dip as the supply far outweighs the demand.
Civic hasn’ been as badly affected as most crypto startups have by the crypto winter, Lingham further revealed. This is because most of the funding the startup raised was immediately converted to fiat, cushioning the firm against crypto volatility. It has had to be careful with its spending, however, as it waits for the market to take shape.
The 80 percent price dip of the market has affected many startups, with many shutting down altogether. According to a report by U.K media house Sky News, over 340 blockchain startups have shut down in the U.K in 2018. Even notable firms such as Consensys, Bitmain, Kraken, Shapeshift and more have had to scale down due to financial constraints.
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