[4/12/2021] Bitcoin’s (BTC) downtrend extended a few rungs lower on Dec. 3 after the price dropped under $54,000 (77K AUD) and traders will note that the BTC/USD daily chart shows a notable uptick in sell volume.
Investors seem concerned at the emergence of a new COVID-19 variant and hawkish comments from the Federal Reserve. Meanwhile, veteran investment icon Charlie Munger added to the fire by comparing the price action in the crypto market to the dot-com era that ended with the bubble popping.
Bitcoin and Ether are “on sale” at these levels
While many have been put off by the recent price action of Bitcoin, David Lifchitz, the managing partner and chief investment officer at ExoAlpha, suggested that “Bitcoin and Ether have been bought “on-sale” when they hit $54,000 USD and $3,900” for those who were able to scoop them up at those levels.
According to Lifchitz, the price of Bitcoin continues to be hampered by “the Mt. Gox liquidation saga” and he suggested that BTC investors are likely to “remain cautious ahead of the distribution expected sometime in Q1 2021.”
Lifchitz also highlighted the spread and impact of the Omicron variant of COVID-19 as a situation to keep an eye on as “a bad outbreak leading to lockdowns would definitely initially weigh on the market.”
Lifchitz suggested that this could possibly lead to another round of government stimulus, “which would increase global debt and weaken currencies against gold and cryptocurrency, while at the same time the funny money could be exchanged for immutable ones such as Bitcoin.”
Insight into how the current price action is similar to a price pullback that happened earlier in the year was provided by analyst and pseudonymous Twitter user ‘Rekt Capital’ who posted the following chart showing this most recent drawdown along with the drawdown in BTC price that happened in September 2021.
Rekt Capital said,
“In September, BTC retraced -25%. This is when BTC investors got Extremely Fearful. Then BTC reversed to new ATHs. Now, BTC is down -23%. It’s likely the Fear & Greed Index will show Extreme Fear very soon. Similar retracement depth. Similar investor sentiment.”
The overall cryptocurrency market cap now stands at US$2.531 trillion and Bitcoin’s dominance rate is 41%.
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