Bitcoin is not far from a critical loss of investor confidence that will lead to the market hemorrhaging vast amounts of value as nervous investors dump their holdings.
This is the opinion of Chris Beauchamp, an analyst at the online trading platform IG. Speaking to the Financial Times, Beauchamp stated that the crypto market leader is heading for a “capitulation moment” when a critical mass of investors begin bailing out of the market, fueling a vicious cycle of price falls and further selloffs.
Unhappy Long Term Holders?
CS recently reported that Genesis Trading CEO Michael Moro stated that the bitcoin price is likely headed for a $3,000 support level after breaking $4,000 last week. This, he said, was caused by a selloff among older bitcoin holders who bought in before the 2017 bull run. According to him, in the aftermath of the destructive Bitcoin Cash community split which had a negative impact on the bitcoin price, they started selling their holdings either to realise gains or cut their losses in case the market dips further.
Echoing this analysis, Beauchamp stated that while many investors may have been happy to hold their bitcoin portfolio at or around $6,000, they were “much less happy” to keep on holding at $4,000 and below. In his words, such investors “would rather take the money and run.” He further revealed that over the past week, IG had seen a 20 percent increase in bitcoin short positions.
Morgan Creek Capital founder Anthony Pompliano recently expressed a similar viewpoint in regard to BTC’s near-term prospects, stating that he expects bitcoin to bottom out at an 85 percent discount to its all-time high after a period characterized by investors finally giving up and trying to make their exit from the market. However, unlike Beauchamp, he is long on bitcoin and expects it to make a strong recovery in the future.
Prominent market analyst and trader Peter Brandt is one of a few voices offering a different viewpoint, statingrecently that while casual traders and newcomers are finding their way out of the market, older investors with a longer time horizon are taking advantage of the depressed bitcoin price to acquire more of the asset.