Bitcoin’s price is being dictated mainly by the bears, as it continues to remain under selling pressure. The top coin is in its third consecutive week in the red and has dropped more than 13 percent over the mentioned period. BTC’s price was dealt a big blow after it broke key support at $8,200 after tapping $10,000 late last month.
Owing to this drastic movement, popular market analyst and hedge fund manager Mark Dow now warns that bitcoin is in an echo-bubble.
Is Bitcoin Bubble About To Burst?
Mark Dow, a former International Monetary Fund (IMF) economist took to twitter to give his views about the recent bitcoin price movement, claiming that strong assets don’t correct downwards after massive rallies like the one witnessed last month – the one where bitcoin rallied past $10,000 fuelled by China’s blockchain FOMO. He went ahead to say that the bearishness seen over the last couple of days validates the echo-bubble thesis.
“We’ll see if 200dma matters to #bitcoin. But truly strong assets don’t give back moves like the one up through 10k, esp when they start from so far below ATHs. Thesis of echo bubble unwind, w occasional upside spasms & progressively weaker FOMO, just got a lot stronger.”
In December 2017 during the peak of the famous bitcoin rally, Dow published a guide on how to short bitcoin. In the article, he also cited that bitcoin was in a bubble. He then predicted that bitcoin’s price would plunge deep after the launch of the futures market. Interestingly enough, this came to pass as bitcoin dropped from $19,511 to $3,750 lows. In addition, he had entered a short position which he finally closed in mid-December 2018 as the bear market kicked in.
Meanwhile, bitcoin’s fundamentals are still strong and institutional demand for crypto is growing with each passing day.
While the bulls have been unable to spark a meaningful recovery after the strong sell-off on Monday, bitcoin has firmly held to the support at $8,000, limiting further downswing. In fact, bitcoin has recovered from the recent drop to $8,060 and is currently trading at $8,166.32.
Moreover, a bull run could be inbound. As ZyCrypto reported earlier, a fresh bull run could begin tomorrow if the bitcoin difficulty attains its expected 4% gain. After analyzing 9 years of historic data, renowned analyst PlanB noticed that bitcoin’s price falls prior to a major difficulty adjustment and this has always ushered in a bull market.
However, past performance is not an indication of how things will play out tomorrow. But, if history repeats itself as it has done over the past 9 years, bitcoin could be primed for significant gains tomorrow.