The price of Bitcoin on Friday dove below $11,000 as the market searched for a support level. The euphoria over the launch of Bitcoin futures has now faded away, and there are no other major catalysts in the near future to fuel another rally.
Less than a week after Bitcoin price hit an all-time high of $19,891, the prices plummeted to its lowest mark since the starting of December. At one point, the Bitcoin price crashed as low as $10,700 on Bitfinex, representing a $9,000 pullback from its high-water mark and forcing the market cap to below $200 billion. At the time of writing, the cryptocurrency has recovered and is trading at $13,960, posting a market cap of $233 billion.
It wasn’t just Bitcoin, every single cryptocurrency in the market has substantially dropped in value. Bitcoin lost the least of its market valuation out of the 10 most valuable cryptocurrencies in the market.
According to Alan Silbert, a long-time Bitcoin investor and analyst, a “gut-wrenching correction” will occur and the Bitcoin price will decline short term. Interestingly, on December 6, Silbert wrote:
Next 12 months in #Bitcoin :
(1) MSM: bubble! bubble! bubble!
(2) BTC keeps going higher
(3) Gut-wrenching correction
(4) MSM: we told you so!
(5) HODLers back up truck, new entrants pile in at sale prices
(6) BTC rises from the ashes again
(7) New ATHs.
(8) Repeat pattern.
Earlier today, Silbert reassured the community that Bitcoin is in the gut-wrenching correction period but will soon move on and demonstrate a swift recovery.
Surprisingly, South Korean exchanges continued to price Bitcoin at a premium relative to western exchanges, and the spread between the markets widened as U.S. traders woke up and Korean traders went to bed. At one point, Korean exchanges had a premium of 37%.
After a bull run, starting from $5,000 all the way up to $20,000, this correction shouldn’t be surprising at all. These pullbacks are necessary because they stabilize the market by shaking off speculators and weak hands.
People who have been in this game understand that this bear run will eventually end. However, many Bitcoin investors have never experienced a true bear market. It is not clear how far the market will drop before it finds a support level. My guess is $9,000, but you never know with Bitcoin.
There are some events to consider in the future that could again put Bitcoin price on an upward trend. For instance, this week Bloomberg reported that the $98 billion investment bank Goldman Sachs is planning to launch a cryptocurrency trading desk by early 2018.
In addition to Goldman Sachs, the New York Stock Exchange (NYSE), has applied for two Bitcoin exchange-traded funds (ETFs), which will allow institutional investors, casual trainers, and retail traders to invest in Bitcoin through regulated channels, apart from bitcoin futures exchanges of Cboe and CME.
Top stories from the Crypto World
1. Russia to introduce cryptocurrency regulation bill next week
According to local media sources, lawmaker Anatoly Aksakov, who chairs the State Duma’s financial markets committee, said that the new rules – which will reportedly formalize rules around the creation and exchange of cryptocurrencies like Bitcoin – are likely to be cleared by early next year.
Aksakov was quoted saying, “I expect that the adoption of the draft law on [cryptocurrencies] will be in March… The problem is that we already have a lot of people who acquire [cryptocurrencies] and they are deceived, we need to give people the opportunity to work legally with it, to protect them as much as possible,”
2. CBOE joins the race to list the first Bitcoin ETF
The Chicago Board Options Exchange (CBOE) filed several proposed rule changes with the U.S. Securities and Exchange Commission (SEC) that would allow the exchange to list six Bitcoin ETFs on its trading platform.
Specifically, CBOE seeks to list Bitcoin ETFs from fund providers First Trust, GraniteShares, and REX. None of these funds will hold bitcoin directly; rather, they will trade futures contracts, meaning that their performance may diverge significantly from that of the asset itself.
Notably, each of these fund providers has filed to create a “short” Bitcoin ETF that will track the inverse of the index, enabling investors to profit when bitcoin futures decline in value.
3. Belarus legalizes cryptocurrency payments and ICOs
Belarus recently legalized cryptocurrencies and Initial Coin Offerings (ICOs), in a move that’s set to drive private sector growth and attract foreign investors to the country.
The decree notably gives cryptocurrency enthusiasts tax breaks and legal incentives, as its goal is to help turn Belarus into an international tech haven. In a statement Lukashenko, a former collective farm manager who’s in the past labeled the internet “garbage,” said:
“Belarus will become the first government in the world that opens wide opportunities for the use of blockchain technology (…) We have every chance of becoming a regional center in this area.”