After breaching the US$11,000 [AUS$15,335] barrier for the first time in almost a year, the Bitcoin price has fallen back below that barrier.
After surging to US$11,148 [AUS$15,562] a couple of days ago, BTC has dropped down to US$10,880 [AUS$15,188].
Promising signs for the future?
The rise in Bitcoin price was a cause for elation for cryptocurrency enthusiasts. The world’s foremost virtual currency has been rather stable for most of the year, with one hiccup in late March where the price fell to US$4,721 [AUS$6,590].
Since that dip, Bitcoin price has quietly risen throughout the rest of 2020. BTC has hovered around the US$9,000 [AUS$12,563] mark for most of June and July, but the last week has seen a nice surge.
Some investors believe the price in Bitcoin will continue to rise for the short-term. They cite several factors for this scenario.
The first factor is that the market is heavily skewed towards buyers at present. Most of the crypto market is longing Bitcoin and other major virtual currencies. Another factor is that the multi-year resistance level of US$11,500 [AUS$16,053] could serve as a focal point for sellers to defend.
Another possible reason for short-term optimism is that funding rates of perpetual swaps, the most popular form of Bitcoin futures contracts, are close to unsustainable levels over a protracted period.
— CZ Binance (@cz_binance) July 28, 2020
Bitcoin price drop?
However, not all are wine and roses in regards to the price of Bitcoin. Crypto trader Nik Yaremchuk points out that the resistance level of US$11,500 [AUS$16,053] has been around since 2018.
— Nik (@truenomic) July 27, 2020
In early 2018, BTC price hit US$11,500 [AUS$16,053]. However, the price of Bitcoin then plummeted to under US$7,000 [AUS$9,771] the following month.
This scenario was repeated in August 2019. Bitcoin reached US$11,500 [AUS$16,053] again but fell down to US$7,800 [AUS$10,888] the next month.
Will such a drop occur again? If so, it could represent a prime opportunity to buy Bitcoin as it dips.
There are reports that a good number of Americans are planning on using their second stimulus check to buy Bitcoin. The release of the first stimulus check resulted in a good deal of buying BTC. Coinbase noted that they had a large number of transactions that were exactly for US$1,200 [AUS$16,751]. If bought early enough, those buyers could have realized a 100% increase in value on their Bitcoin (although they will have to pay capital gains taxes on the profit).
Featured image courtesy of Fabian Figueredo/Flickr