Bitcoin has in the last couple of hours slipped below the $7K mark. The drop below this crucial support means that Bitcoin is unlikely to get back above $8K resistance before the end of the year.
Although following the drop, there seems to be some calmness and strong support above $6.8K, the move has been an unwanted surprise for many traders. Most were expecting a move upwards in the next few days setting a positive trend for the end of the year. The drop comes as Hedge fund manager Mark Dow affirms that Bitcoin is still in a ‘textbook echo-bubble‘.
The dip has been accredited to a number of reasons with the most compelling one being the PlusToken Ponzi scheme revelation. A report by blockchain analysis firm Chainalysis revealed that PlusToken holds 6,400,000 million ETH and a sum of Bitcoin valued over $1 billion. In fear that PlusToken will dump their holdings, some investors have panicked and sold.
There is also the case of low volume over the last few weeks which makes the market susceptible to downfalls. The holiday season could be the main reason for this which means the volume is unlikely to pick up over the next few days. That is unless there is a clear catalyst that can trigger a bull run.
Textbook Echo Bubble?
The hedge fund manager, Mark Dow, has stated in the wake of the recent slip that Bitcoin is in a textbook echo bubble. His comments come days after he wrote on Twitter that Bitcoin would die a slow grinding death.
In his latest remarks, he draws attention to a chart that shows Bitcoin is closing under its 20-week and 50-week moving averages. This means more bearish pressure and a likely repeat of the 2018 price action. Dow’s utterances since he famously shorted the 2017 top of $19,000 that same December have been key for many investors.
Although most bears would agree with Dow’s prediction, most investors don’t. Over the last couple of months, there have been some key developments that have set the stage for further growth of Bitcoin. Chief among which is the recent adoption of blockchain technology in leading countries such as China. There is also a key catalyst in the form of block reward halving expected in 2020 which will further boost Bitcoin’s position in the months to come.