Over the past hour, the bitcoin price has increased by 1.4 percent, from $7,410 to $7,550, after recording a sudden spike in buy volume, as shown below in the 30-minute chart of bitcoin below. Cryptocurrency market has also moved up slightly but has struggled to record any major movement.
Bitcoin to $6,000
While several bulls including Wall Street firm Fundstrat founder Tom Lee and John McAfee have expressed their optimistic in regards to the short-term growth of bitcoin, it is highly likely that the bitcoin price drops to the lower end of $6,000, as suggested by cryptocurrency researcher Willy Woo.
“I think we are gonna go to $5500-5700 next, I can’t see $7000 holding. Most likely we’ll balance a bit, then we’ll slide through. Long timeframes here, looking into June for rough timing of this to play out at a best guess,” said Woo.
Based on the overly strong downward trend of bitcoin, high NVT signal, and volatility, Woo suggested that it is unlikely bitcoin records a major bounce from the current level back to the $8,000 region.
Cryptocurrency investor and Blocktower co-founder Ari Paul raised a similar point on May 25, stating that due the current period of oa low volume consolidation, an abrupt increase in volume and price is not expected.
“Always a good bet for vol to mean revert, but this has been a low volume consolidation which is a much weaker setup for explosive moves than a high volume consolidation,” Paul explained.
As seen in the 30-minute chart of bitcoin above, the volume of bitcoin and the entire cryptocurrency market have remained relatively low since mid-May, when the bitcoin price started to fall after testing the $10,000 region. Apart from three buy and sell spikes, since May 24, the volume of bitcoin has remained significantly low in comparison to April and early May.
On yesterday’s report, CCN suggested that following bitcoin’s trend since January, it is likely that the bitcoin price bounces from the $6,500 level in the short-term. But, analysts see the bitcoin price dipping below the $6,000 level, especially if the market cannot regain its volume in a swift manner.
Tom Lee, who called a 70 percent increase in the value of bitcoin after the Consensus 2018 conference in New York, resorted back to the institutional investors argument to predict a $25,000 price target for bitcoin in the short term.
“I think institutional investors have gained a lot of interest, and they haven’t really come into crypto yet because there is still some regulatory uncertainty. But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why Bitcoin rallies.”
Currently, a very small number of institutional investors exist in the cryptocurrency sector and large-scale multi-billion dollar pension and funds are struggling to acquire cryptocurrency due to regulatory hurdles.
Bulls like Lee believe some regulatory clarity will lead institutional investors to invest in the market and even if institutional investors enter the market, it will take many months for them to commit with large allocations.
Follow us on Telegram.