Chainalysis Economist: The Worst Is Over for Bitcoin | Live Bitcoin News
Some claim that bitcoin’s price can be predicted, while others say they know when bitcoin will go up and down. Is any of this truly possible?
Can We Ever Know What Bitcoin Will Do?
Bitcoin – the world’s number one digital currency by market cap – reached a 2020 high last month when it jumped past the $10,300 mark, though at press time, the currency is struggling in the mid-$6,000 range. While this is ultimately an improvement over where it was just two weeks ago, there is still a lot of room for growth, and bitcoin has lost nearly half its value in a little over a month.
One of the reasons that bitcoin has fallen into oblivion as of late has to do with a sell-off that occurred thanks, in part, to rising fear and panic surrounding the coronavirus. Many see times like these as very unpredictable; they seek to sell off all assets while attaining as much cash as possible. Thus, many sold off their crypto stashes and their stocks to ensure they were safe during this growing pandemic.
Now that bitcoin is beginning to spike again and exhibiting signs of recovery, some believe that the market is fresh for a new front of buyers. With more enthusiasts entering the market and purchasing bitcoin units, the currency’s price is likely to expand greatly over the coming weeks.
Philip Gradwell – chief economist at Chainalysis in New York – states:
Given the uncertainty around the COVID-19 pandemic, it’s hard to predict where the bitcoin market will go next. However, large increases in exchange inflows have proven to be a good indicator of increased volatility, so we recommend keeping an eye on the amount being transferred to exchanges.
He further explained that he’s convinced the recent drop in bitcoin’s price was likely caused by activity from both institutions and retail markets alike, though he’s confident that in the future, professional traders are likely to hold more of a stance in bitcoin’s future. He claims:
We expect that professional traders will continue to drive events, as opposed to retail exchange users, simply because they are responsible for much larger volumes.
The presence of institutions is a bit questionable at the time of writing, however, given that futures trading – which is largely dominated by an institutional presence – has been down for the count these last few weeks. Organizations like the CME Group in Chicago, Illinois, have recorded their lowest trading volumes yet, while others like Bakkt – which is governed and owned by the Intercontinental Exchange (ICE) – has experienced no trading whatsoever in some time.
The Worst Is Over
Gradwell did offer some good news, however, and stated:
The majority of excess bitcoin arriving at exchanges has been sold, and the worst of the oversupply appears to be finished for now.
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