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Analyst says Bitcoin could see ‘a smaller drawdown and a quicker bottom’

Bitcoin is a digital currency that can be used to make payments over the Internet. At its highest point, the value of a single Bitcoin exceeded $20,000 and it’s going through yet another massive correction. But it’s not the first time Bitcoin has been through price fluctuations. And in the last few years, Bitcoin has established itself as an increasingly popular way to invest money. But if you’ve never been exposed to Bitcoin, how do you know if it’s a good investment for you, and what should you do if you’re worried about the price?

If you believe in Bitcoin, don’t read this (because it will be bad news for you). The cryptocurrency’s recent volatility was driven by the wild swings in its price stemming from a technical sell-off over the past few days. As Bitcoin’s price dropped to $8,000, and then to $7,000, and then to $6,000, and then to $5,000, and then to $4,000, and then to $3,000—making it the worst-performing currency in the world—everyone tried to explain why Bitcoin was in trouble.

Bitcoin (BTC) hasn’t been able to hold on to its recent gains, and the decline continues as the world’s largest cryptocurrency falls to $5,000, from a December high of nearly $19,000. Some analysts see a small upward price recovery in Bitcoin in the coming year, but the cryptocurrency is still prone to big dips.. Read more about when was bitcoin at its lowest and let us know what you think.

Supporters of cryptocurrencies have found a way out of the recent market woes thanks to rallies in Decentralized Finance (DeFi) and Dogecoin (DOGE) tokens in Q2. June. Some breakout in the price of Ether (ETH) and Bitcoin (BTC) may have also boosted sentiment, but for now the major digital assets are still encountering a setback at key upper resistance levels. Data from Cointelegraph Markets Pro and TradingView show that the price of bitcoin rose by 7.3% from the low of $35,645 on the 1st. of June to an intraday high of $38,250 on the 2nd. of June, while Ether posted a similar gain of 7.7% and briefly returned to the $2,800 support. While the rise in price is prompting many to expect a continuation of the bull market into 2021, some analysts have noted a possible bearish pennant formation on the bitcoin chart that could lead to a price breakout towards the $16,000 level. Bitcoins-pennant structure and its main downside target. Source: TradingView

Market summit or breather for the bull market?

The volatility in the price of bitcoin over the past month has led many to wonder if the top has been reached for BTC, or if the current correction is just an interim uptick that is getting the asset ready for another rally. Further insight was provided in a recent report by Delphi Digital, which examined the MVRV ratio, an on-chain metric that measures the market value (MV) of bitcoin relative to its realized value (RV) as an indicator that can help traders identify market peaks and valleys. Bitcoins MVRV price ratio. Source: Delphi Digital The chart above shows that the MVRV ratio was overcollateralized in early 2011, late 2013, and early 2018, all of which marked a stop in the cycle, as indicated by Delphi Digital. The researchers also pointed out that the May 2021 measurement could well mark the peak of this cycle. While it is possible that the top in the current cycle has already been breached, Delphi Digital also noted that it is possible that the market could experience an outcome reminiscent of the 2013 double bubble, when BTC hit ATH [all-time high], the price fell sharply, and then rose well above ATH in the same year. The report also points out that the threshold for determining bitcoin’s bottom has increased over time, which could change the landscape of the bull market in the coming years. According to Delphi Digital: Given the current sharp decline in MVRV, it is possible that BTC will experience a smaller and faster decline than in previous cycles. This would bring to mind something like global equities that have corrections of several months and upward cycles of several years. As a caveat, the report notes that while there is currently a lot of conflicting data and sentiment in the market, a return to the mean is likely in the coming weeks as the price has broken away from its 50-day moving average. Base CaseBTC: Average Performance. Source: Delphi Digital Historically, the price of BTC is quite close to its 50-day MA. And if you look at previous prints, BTC has always shown a healthy rally after a deep pullback. This is the result of the natural reflexivity of the market. Analyst says Bitcoin could see ‘a smaller drawdown and a quicker bottom’

Altcoins rise by double digits

Altcoins reached a record high during price momentum on the second trading day. Double-digit gains in June, led by a 53% increase in the price of Kyber Network’s KNC token, which again reached the $2.50 mark. KAVA is also up 37% and is currently trading at $4.70. Daily indicators for the crypto-currency market. Source: Coin360 Analyst says Bitcoin could see ‘a smaller drawdown and a quicker bottom’ Dogecoin, Kusama’s KSM token and Curve DAO’s CRV token also contributed to the growth of altcoins, with prices rising about 25% and OKB rising 33% and trading around $17.70. The total capitalization of the cryptocurrency market is now $1.709 trillion, with bitcoin leading the way at 41.5%. The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. There are risks associated with all investments and transactions and you should do your own research before making a decision.A few weeks ago, I was working with a client who spends upwards of 40 hours a week trading Cryptocurrency. He spends more than half of his waking hours, trading and managing his accounts. The problem was he was feeling frustrated with the market, and he didn’t know what to do about it. Whenever he felt the market was spiralling out of his control, he would trade his last remaining coins.. Read more about future of cryptocurrency 2021 and let us know what you think.

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