Bitcoin - profit collection and quick entry back

At the beginning of the week, the situation on Bitcoin made several investors nervous, when its price dropped below $ 30,000 after the attack of $ 42,000. But eventually, it turned back very quickly and it seems now that the market is starting to look for a fair price. However, volatility is likely to accompany the market for several more weeks and vertical growth is already beginning to call for regulation. Will 2018 be repeated, or will large institutions support Bitcoin's growth even higher and try to attract even more retail?

The correction was cleared very quickly

We have become accustomed to daily movements in the thousands of dollars in recent months. The novelty of the last week is sometimes a turbulent development, which brings daily movements of tens of thousands of dollars. Specifically, the price of Bitcoin fell to $ 30,000 yesterday, which was probably the result of a larger collection of profits that followed the $ 40,000 mark. The rise in the price of Bitcoin has been almost vertical in recent weeks, and almost always after an attack by a round number, there is a correction. This continued until $ 30,000, where, however, there were again active buyers who managed to get the price up to the current 35,000.

BTCUSD Daily Chart
Chart: BTCUSD Daily Chart (Source: MT4 PurpleTrading)

Stagnation or further growth?

The situation compared to 2017, when the price stagnated for a long time after the correction, is significantly different and the target price of large institutions this year stops near $ 100,000. The reason is, among other things, the entry of large institutions into the market. It seems that the market will go in only one direction this year, but we must not forget the "noise" that may increase in the market. Sooner or later Bitcoin must also find some "fair price" in order for the market to have a chance to match orders and take a break from extreme volatility. From a logical point of view of supply and demand, the moment will come when there will simply be no such demand at higher prices, which will stop the price from rising.

Most investors are waiting for corrections, after which they are going to enter the market, but it is very difficult to estimate how far the price may fall. That is why it’s important to reiterate the importance of round numbers on which positions can be accumulated. However, the next correction may be significantly larger than the one we saw yesterday. What's more, the current decline can only be the beginning of a larger decline. Here, a lot will depend on investor confidence, which we can again observe as an indicator in other markets, such as the stock market. If US stock indices are still close to record highs, market sentiment remains good. Likewise, further growth in Bitcoin may indicate a declining US dollar, reflecting a decline in risk aversion.

Attention of regulators

In the medium term, regulation may be a problem, as current developments naturally attract the attention of regulators. It is a sector like any other, and although the regulatory environment for cryptocurrencies is still in its infancy, many analysts expect it to develop faster as the sector becomes more mainstream. The British financial regulator FCA recently banned the sale of crypto-derivatives to retail investors and warned of the risk of losing all capital. In the United States, several investment firms have requested the creation of an ETF for cryptocurrencies, but the US Securities and Exchange Commission has rejected it. In the long run, however, the growing interest in the possibility of investing in cryptocurrencies is good news, but common sense suggests that one day there will come a time when the price of Bitcoin will need to be significantly more stable, for example for our daily needs.

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