Within the past three days, since May 31, the bitcoin price has climbed from $8,000 to $8,800, demonstrating a strong sign of recovery in a 9.5 percent rally and pushing the rest of the crypto market to the upside.
On major regulated crypto asset exchanges like Bitstamp, the bitcoin price dropped to as low as $8,000 on last Friday, sparking fears of a potential decline below $7,000 in an anticipated pullback.
The dominant crypto asset showed immediate recovery beyond $8,200, a support level many technical analysts have emphasized as crucial for the near-term sustainability of bitcoin.
TRADERS MORE COMFORTABLE WITH BITCOIN FOLLOWING MAY 31 DROP
Peter Brandt, best-selling author and well recognized technical analyst, has said that following the unexpected 12 percent drop of bitcoin on May 31, he has become more comfortable with the trend of the asset as it demonstrates stability.
— Peter Brandt (@PeterLBrandt) May 31, 2019
At the time, when the drop occurred, technical analysts such as John Bollinger, the inventor of Bollinger Bands, stated that whilst there is room for bitcoin establishing an important leg up in an upside, there exists a possibility that it drops 50 percent in a retracement.
“This is a major inflection point for the cryptocurrencies. Clearly defined top formations are in place nearly across the board. If we can overcome this and break higher I see another important leg up, if we break down a 50% retracement is the first logical target. Time to pay attention,” he said.
Still, in the medium-term, considering that the bitcoin price is up 135 percent year-to-date against the U.S. dollar, some investors foresee a pullback occurring as it surpasses key resistance levels.
Bitcoin has moved based on a healthy trend in recent weeks, regularly seeing 10 to 20 percent pullbacks supplemented with large upside movements.
When bitcoin exceeds $10,000, billionaire investor and Galaxy Digital CEO Mike Novogratz stated that he expects the asset to consolidate in the $7,000 to $10,000 range.
“On a go-forward basis, Bitcoin probably consolidates somewhere between $7,000 and $10,000. You know, trees don’t grow to the sky. If I’m wrong on that, I think I’m wrong to the upside, that there’s enough excitement and momentum that it could carry through,” he said, speaking to Bloomberg.
Novogratz emphasized that he could be mistaken about a potential pullback, which would mean that the sheer momentum of bitcoin carries it past strong resistance in an extended rally.
WHY INDUSTRY EXECUTIVES ARE GENERALLY OPTIMISTIC
Echoing the sentiment of ShapeShift CEO Erik Voorhees, Novogratz said that the perception of bitcoin in the past several years by the public and the broader investor base has drastically changed.
Initially, investors were skeptical of the survivability and sustainability of the momentum of bitcoin in the long-term.
Fast forward ten years of operation with barely any downtime supported by an active open source developer community, a robust mining industry, and millions of users, Novogratz noted that investors are becoming more confident in the future of crypto.
“We have gone from, you know, crypto as an experiment, is it real? Is it tulips? To crypto is going to be a substantial part of the financial and consumer infrastructure of the world,” he said.
Voorhees similarly countered the argument of critics comparing the trend of bitcoin to that of tulips in the 1600s, stating that after its initial implosion, the tulip bubble struggled to demonstrate sustainability.
“Tulips never re-emerged to hit new ATH’s. Bitcoin does it every couple years. Anyone equating the two needs to explain this discrepancy,” he said.