While many Bitcoin observers flood the space with price predictions, one observer weighs in on what price marks the crypto’s bottom.
Since the beginning of the year, crypto traders have heard all kinds of price predictions for Bitcoin. They’ve also heard all kinds of noise about when the crypto would hit its bottom.
None of it has come to fruition. Bitcoin has done what it does best, and that’s be volatile and completely unpredictable.
Enter Bill Baruch, the president of Blue Line Futures. He observed the days of Bitcoin’s wild price swings as nearing an end.
He recently penned a piece for CNBC on the issue. Here, we’ll go over what this Bitcoin guru see’s happening next for the crypto.
Three of the reasons Baruch cites as being behind Bitcoin’s fall from the $20,000 it neared in December are:
- ongoing regulatory scrutiny
- the birth of its futures market
- exchange hackings
“Less clear to cryptocurrency traders, however, is what to make of the cornerstone cryptocurrency’s realized volatility.”
While the decline and volatility have shaken the newbies to the crypto space, the old school players likely recall Bitcoin’s volatility in 2017 being worst.
Baruch pointed to Bitcoin’s rolling 30-day annualized volatility to paint a clearer picture of the amount of volatility in Bitcoin’s price. He noted that this volatility has sunk to around 61%, which is modestly higher than the 50% low from earlier this month.
Still, Baruch said “this volatility pales in comparison to the annualized volatility seen last year, north of 150%.”
“Ultimately, after its volatility has become this depressed and the cryptocurrency has lost as much as 70% from its December peak, I believe the selling has become exhausted, and a bottoming process can begin.”
$6K is price to watch
Baruch acknowledged that Bitcoin topped out in the midst of the futures contract launches. This was partly due to FOMA, or the fear-of-missing-out. People piled into Bitcoin and other cryptos based on optimism that the tokens would indeed continue to move higher, not lower.
So, when the sell-off began, so did the fall in enthusiasm, Baruch noted. No matter, Baruch is optimistic.
I like to say that a bottom is a process, not a price. Now that the price and volatility have come back down to Earth, this bottoming process can begin. I see significant upside from here in the long-term.
He added that for the near term, a bottom would occur more quickly and more constructively if the recent low of $6,000 per coin holds. He added that the 100-week moving average is down near $4,550, so traders will be watching that level.
Stay strong, positive
There is still optimism that Bitcoin will head higher above $10,000, which it has stubbornly not reached in months. Remember, in January when it was as high as $16,597? That seems like light years ago!
For Baruch, $10,000 is a crucial line in the sand. He admits that he’s even advised traders to sell against it.
Meanwhile, the six-month downtrend remains intact until a close above $11,300, and the near-term downtrend remains intact until a close above $8,500, he said.
At the time of writing, Bitcoin’s price was $6,781.
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