Despite a slight bounce Friday morning, some analysts don’t expect bitcoin to chart a quick recovery from the double-digit price drop over the last two days.
- Bitcoin fell by over 10% on Thursday to $10,006, according to CoinDesk's Bitcoin Price Index.
- That's the biggest single-day percentage decline since March 12 when bitcoin prices crashed around 40% amid a major sell-off across the equities markets.
- Other data sources such as Bitstamp even logged bitcoin as dropping a little below $10,000.
- At the press-time price of $10,520, the cryptocurrency is down 18.59% from the recent high of $12,476 registered on Aug. 17.
- Similar double-digit price pullbacks observed in April and May were quickly reversed in a couple of days, a sign of buy-the-dip mentality.
- This time, though, a quick V-shaped recovery back to recent highs around $12,000 looks unlikely due to cryptocurrency's increased sensitivity to traditional markets.
- "The worst may be behind us, but bitcoin can take days to form a good base," crypto analyst Edward Morra, who called the market top at $12,000, tweeted early on Friday.
- Matthew Dibb, co-founder, and COO of Stack, a provider of cryptocurrency trackers and funds, told CoinDesk that prices could drop below $10,000 if the global equity markets retrace.
- "Macro factors are currently at play, and bitcoin shows a higher correlation to global equities markets in this 'risk-off' period," Dibb said.
- Indeed, sharp losses on Wall Street look to have accentuated the bitcoin price drop on Thursday.
- Stocks may extend the sell-off, pushing bitcoin below $10,000 on Friday if the all-important U.S. non-farm payrolls report shows the labor recovery is losing momentum.
- The data, scheduled for release at 12:30 UTC, is forecast to show the economy added 1.4 million jobs in August versus 1.76 million additions in July.
- Joel Kruger, a currency strategist at LMAX Group and macro trader at MarketPunks also sees scope for additional price declines on the back of risk aversion in equity markets.
- "The next key support comes in the form of the June low at around $8,900," Kruger told CoinDesk in a Telegram chat.
- However, he still expects bitcoin will eventually realize its potential as a store of value.
- Additionally, activity in the bitcoin options market suggests investors are adding bets to position for an extended decline in the cryptocurrency.
- The one-month and three-month put-call skews have recovered sharply to positive territory this week.
- That's probably due to investors buying put options (bearish bets) to hedge buy positions in the spot/futures market, according to Vishal Shah, an options trader and founder of Polychain-backed derivatives exchange Alpha5.
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