It’s safe to say that 2020 has been a year full of exciting moments on the cryptocurrency market and Bitcoin in particular.
The price for the leading digital currency surged to a yearly high at around $10,500 only to decline down to $3,600 and recover to $6,600 where it’s currently trading.
Of course, all of that didn’t happen overnight but it did take place in a relatively short span of less than three months.
2020 began rather positive as the price at the beginning of January was just north of $7,000 and in two months it reached $10,500.
At that point, barely anyone was thinking of shorting Bitcoin with leverage and bulls were all over the place. With the halving just three months away, what could have gone wrong?
Well, ironically or not, exactly one month after reaching its yearly high at around $10,500, Bitcoin was briefly exchanging hands at $3,600.
Even though the price has since recovered, it’s still trading below the yearly open as it currently stands at around $6,600.
What Caused the Massive Drop In Bitcoin’s Price?
This is perhaps one of the most widely discussed topics in the cryptocurrency community throughout the past couple of weeks.
Bitcoin lost almost 50% of its value in just a day – on March 12th and 13th. It did so viciously in just a couple of terrifying red candles.
The price went down to as low as $3,600 on certain cryptocurrency exchanges but found support there and bounced back immediately.
The cryptocurrency has since recovered and it managed to gain about 83% as it currently trades around $6,600.
Now, it’s important to note that in the past month, the entire world has been in a crisis.
The novel coronavirus (COIVD19) that started off in China, took over the globe and continues to spread with a concerning magnitude.
Inevitably, countries were forced to take measures with a lot of them instituting optional and mandatory quarantine for their citizens.
A lot of countries shut down their borders. Large and small businesses felt the impact immediately.
The stock markets tumbled. The Dow Jones Industrial Average (DJI) hasn’t seen declines of the kind since 1987 while the S&P 500 marked its quickest 10% correction in history.
Amid violent declines of the kind, investors turn to liquid markets in order to get their hands on cash as quickly as possible, regardless of whether they sell at a loss or not. This is what happened with Bitcoin.
In fact, a recent report showed that the majority of sellers during the 40% crash on March 12th-13th panic-sold at a loss.
What’s Next for Bitcoin’s Price?
At times of economic uncertainty of the kind, predicting what’s going to happen with Bitcoin’s price is nearly impossible.
However, the price has managed to recover from the massive slump, as mentioned above, and it currently trades at around $6,600.
Technically, there is a serious resistance around $6,800 that Bitcoin has been attempting to breach over the past few days.
It’s important to note that another failure to breach this important line of resistance might paint a double-top pattern on the charts, confirming a short-term bearish bias.
On the other hand, the 50-day moving average crossed below the 200-day moving average to form the so-called Death Cross which is also a lagging bearish pattern.
By extension, the Fear & Greed Index suggests that the market is currently in a state of extreme fear, meaning that investors are afraid to get involved.
However, history has also shown that times like these are among the most opportunistic situations.
In the words of one of the most prominent investors of all times, Warren Buffet: “Be fearful when others are greedy and greedy when others are fearful.”
Only time will tell what’s in the making for Bitcoin but if one thing is certain it’s that there are very interesting times coming ahead of us.
Disclaimer: This is a contributed article and should not be taken as investment advice