Bitcoin price slashed drastically by more than 20% throughout the week following a rejection from the $45,000 resistance levels. Moreover, the bottoms below $35,000 were yet again tested amid the Russia-Ukraine conflict which triggered a major sell-off due to extreme FUD. Along with Bitcoin and the entire crypto space, all major trading platforms also recorded huge losses hitting the lowest levels off-let. While the recent dip in the BTC price was ascertained to be the bottom level, some factors suggest diversified facts.
Bitcoin or any other cryptocurrency is highly volatile compared to the other investment assets in the market. It is a known fact that BTC prices share a decent correlation with stock & Index markets. And hence in case of extreme uncertainty, investors often seek to protect their USD positions or bonds. Therefore, until the dark clouds of uncertainty eases out many more bottoms may be expected.
On the other hand, BTC futures are also somewhat bearish as the premium hits a 3-month low level of close to 5%. The annual premium needs to be between 5% to 12% with a locking period of 3 months until expiry. This displays a lack of confidence within the traders.
No doubt the lowest levels were recorded in July 2021 recording 2.5%, it was due to 74-day price correction. Much similar to futures premium, the correlation metric uses historical data and hence trend reversals are very hard to predict. Investors tend to believe more in the market variations which escalate the asset’s value rather than deplete. And hence, the steep short term corrections may hinder the price rally. Therefore, one cannot say that the $34,000 may be the bottom of Bitcoin as many more may be on the cards.
Source: https://coinpedia.org/bitcoin/was-34000-the-bottom-for-bitcoin-price-yet-chart-do-not-say-so/