Since dropping to the $6000 level in February 6, its lowest price point since November 13, Bitcoin is having a decent run this week, currently trading at $10,990 as of the writing of this article. The slow and steady growth started when Bitcoin prices hit a major support level at the $6000. The current trend shows a decent recovery for Bitcoin, which is also supported by the recovery of total market capitalization to the $500 billion level. These are good signals that Bitcoin is slowly getting back on track to higher price points.
Despite these good signs and indicators, investors should still keep in mind that there are many active threats to Bitcoin’s rise in terms of price. Here are three major threats that you should be paying attention to:
These are the investors that bought Bitcoin during the December bull run that peaked at the $20,000 mark. These people are those who may have succumbed to FOMO or fear of missing out, and got in to the bandwagon hoping to get quick profits riding the Bitcoin shoot up. The problem with these investors is that they are desperate to sell their positions, which they bought at high prices, in order to cut their losses. Most of these desperate sellers sell their Bitcoin once prices hit key resistance level. Eventually, as the prices reach resistance, the selloff from desperate sellers create a sell wall that drives prices back down.
These are traders and investors that bet on Bitcoin prices going down. They make more money as prices plummet. The lower the dive, the higher their profits go. This puts downward pressure on the price of Bitcoin. While many traders want prices to go up, short sellers want it to go down. Since the major correction that happened this January and February, short selling Bitcoin became more popular among investors.
Short Term Traders
The third threat that may affect Bitcoin prices are the short term traders. These traders are the ones who bought Bitcoin during the market correction. Most short term traders who were able to buy during the $6000 level correction may want to take in some profits as the market recovers. Since many traders use short term trading as their strategy, their presence in the market is a definite influencer. They are among the ones that affect the price trend of Bitcoin and the steepness of the price growth.
You should pay attention to these threats because this means that Bitcoin will continue to have high volatility as it recovers. Price points may even bounce multiple times during consolidation phase, and steep dives may occur when resistance levels are reached. These factors are definitely affecting the price movement, at least in some levels.