On December 4, the price of bitcoin for the first time since the end of September fell to $ 42 thousand. During the day, the value of the asset fell by more than 20%. This provoked a massive liquidation of traders’ positions for $ 2.5 billion. Experts from RBC-Crypto explained what is happening in the market after the collapse and at what level it is worth buying bitcoin.
Major players use the fall to buy
Now an interesting situation has developed in the digital asset market, says Mikhail Karkhalev, financial analyst at Currency.com crypto exchange. He recalled that the collapse of bitcoin was preceded by the emergence of a new strain of coronavirus Omicron and the potential tightening of the US Federal Reserve’s monetary policy. These negative factors affected the quotes of the stock markets, but less volatile, the analyst said.
Despite the decline to $ 42 thousand and the massive liquidation of positions, the data on-chain metrics continue to indicate that large players are using the fall to buy an asset, says Karkhalev.
“This is more of a speculative collapse than some kind of logical foundation. It seems to me that this is far from the end of the current growth cycle, further recovery and further growth will follow, ”the analyst added.
In November, the “Fear and Greed” index reached its maximum level at the value of “extreme greed”, recalled Andrey Podolyan, CEO of Cryptorg. At the moment, the index has dropped to the level of “extreme fear”, which was observed in the summer, when the price of bitcoin dropped to $ 28 thousand, the expert explained. In his opinion, this indicator value shows that at the moment there is a favorable period for buying bitcoin.
Podolyan noted that the last collapse of the crypto market occurred after the closing of futures trading on the Chicago Mercantile Exchange, in the so-called “thin” market.
“Major players practically did not suffer, because today the price did not open so low in relation to the close of Friday,” the expert noted.
He also recalled that large investors continue to build up long positions with each fall. This indicates that institutions are predicting good upward movements, the expert added.
Investors are changing strategy
Based on recent events, we can say that investors have begun to shift funds from high-risk assets to more stable instruments, says Artem Deev, head of the analytical department at AMarkets. In his opinion, this usually indicates a serious decline in the stock market in the near future. Similar sentiments among investors were observed in 2001 and 2008, the analyst noted.
Against the background of this trend, Bitcoin will continue to decline, Deev predicted. According to his forecast, if the cryptocurrency falls below $ 42 thousand, it will continue to fall in price up to the level of $ 28 thousand.
“This could be a signal to buy assets at an attractive price. Further growth of cryptocurrencies is possible in the horizon of 6-12 months, as the situation in the markets stabilizes and interest in risky assets returns, “Deev added.
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