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Bitcoin’s recent plunge to below $7,000 pretty much shell-shocked much of the crypto community, leaving some market participants scrambling and others to speculate about why it happened. The months leading up to the next bitcoin halving event are supposed to be exciting, but bitcoin has once again proven its unpredictable not to mention highly volatile nature.
No crypto investors have been unscathed by the fallout, billionaire trader Mike Novogratz included. The Galaxy Digital CEO has felt the pain of the November sell-off, seemingly turning his attention to other causes when things seemed the darkest. Given that it’s darkest just before the dawn, bitcoin could break out of this rut sooner than later – but the clock is ticking.
Novogratz tipped his hand to how he is navigating the market and rather than making price predictions has described a fork in the road for the cryptocurrency. He is giving the BTC price until Wednesday to recover to $7,500, saying that if it fails to do so bitcoin will find itself in a prickly situation – stuck in a range of $6,000 at the low end and $7,400 at the high end. The last time Novogratz shared his outlook for the bitcoin price, he guided toward a range of $7,000 to $10,000 with potential for greater upside, which successfully proved to play out for months.
Despite the critical juncture in which bitcoin finds itself today, sophisticated traders are always the first to remind the crypto community about the bigger picture, and here again Novogratz doesn’t disappoint. The former Fortress hedge fund manager points out that BTC has still advanced by nearly a triple-digit percentage year-to-date, which incidentally is more than can be said for other asset classes, gold included.
Novogratz’s social media followers were relieved to hear him weigh in on the crypto market meltdown, with more than one of them suggesting he give fate a little nudge.
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So what is behind bitcoin’s bad mood? Mati Greenspan, founder of QuantumEconomics.io, said it best when he described the weekend trading activity as a “crypto crush,” one that left some coins down more than 10% since Friday.
China certainly has given a whipsawing to the market by playing chicken with the cryptocurrency space. And no doubt that has spooked investors. Greenspan points to the Crypto Fear and Greed Index, which is currently trading at a two-month low, reflecting extreme levels of fear.
But China can’t be blamed for all of the selling, especially considering that the bitcoin price surrendered all of its gains since the Chinese government declared their affection for the blockchain. Greenspan states:
What seems most likely to me, and of course will be very difficult to prove, is that some of the miners who had been stashing bitcoin during the bull run are releasing additional supply on the market.
There are several nuances to Greenspan’s theory, involving new mining rigs, old mining rigs, and potential price wars, oh my. In the meantime, bitcoin is trading back above $7,100 and is inching ever so slowly toward Novogratz’s target.