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Investors who are viewing the current correction as a favourable accumulation opportunity should re-think their stances. This may well be the beginning of the end for Bitcoin.
In a previous post last month, I had predicted that Bitcoin had entered into a phenomenon known as the “Bollinger Squeeze” on the weekly charts, and was set for a massive price movement. In the absence of positive drivers for the beleaguered cryptocurrency that has lost nearly 75% of its value since the start of the year, a breakdown seemed more likely than a breakout.
Dwindling volumes, unmanageable volatility, and slowing acceptance of Bitcoins amongst merchants are some of the factors that brought the speculation fuelled rise of Bitcoin to a grinding halt 2 months ago, post which it traded in a narrow range as the market awaited cues with bated breath.
In recent times, daily trading volumes have remained subdued, with less than 80K Bitcoins changing hands every day across all popular exchanges. Today, trading volumes have surged to more than 220K – which indicates that the selloff is taking place with full force.
While some fund managers and experts still remain bullish on Bitcoin and are advising investors to “stay calm”, my guess is that it’s the endowment effect speaking more than anything else; as they likely hold BTC in their portfolios.
