The most famous cryptocurrency of the world, Bitcoin, is grabbing attention again. The market is unpredictable, and its price recently crossed the $100,000 mark, causing excitement. Are we looking at another big rally or should investors prepare for a downturn? Let’s break it down.
The Drop in Active Bitcoin Users
A concerning trend is the decrease of Bitcoin’s active users. The number of people using Bitcoin has plummeted since the price crossed the $101,000 mark, said analyst Axel Adler. This is especially important because it shows that people are interested in Bitcoin. Active users are important as they display interest in Bitcoin. Less demand means possibly price drops, with fewer active users.
However, Adler noted something interesting: It does sometimes turn into a big comeback, when the number of users drops due to high market uncertainty. Previously, things bounces back up in prices after similar situations. Some investors are hoping that Bitcoin will soon climb higher thanks to this pattern.
Support Levels are Key
A recent high of $102,300 has seen Bitcoin trade around $95,000. This price level is important because it comes to determine if Bitcoin shall skyrocket further or plummet some more. Bitcoin might bounce back to new highs if it stays above $92,000, a so-called ‘support level’.
However, if it goes below $92,000, as experts warn, it could drag it even lower to $85,000 or below. The uncertainty is making traders nervous and the next couple of days could be decisive.
Why Does $100K Matter?
Bitcoin’s crossing of $100,000 is a big number, and a big deal, due in part to the fact that it is a numerical brain barrier. Others see it as a milestone and breaking past it tends to bring more buyers. If Bitcoin can’t hold this level, it is likely to trigger concern amongst investors, and subsequently cause panic selling.
Signs of Optimism
Despite these reasons to be cynical, there are actually reasons to stay positive. To be sure, some sources of market data imply that Bitcoin is in a stage that sees price stabilization or an uptick later if the asset regains support. For instance, the Choppiness Index, a signals tool helping to predict whether the market will rise, or fall, sharply in the upcoming few weeks, indicates the breakout to come soon.
However, an encouraging sign is that many bitcoin holders are taking coins off the exchanges. Typically this means that they expect to hold their Bitcoin for the long term and prices to rise.
What’s Next for Bitcoin?
You could have a dip in the price of Bitcoin. Traders may feel more comfortable again if it stays above $92,000 and the price could rise once more. If it breaks below this level, there could be more trouble for the market.
Investors will continue to keep an eye on things for now. Whether Bitcoin bounces back or dips further, one thing is clear: The cryptocurrency market is as unpredictable as it always has been.
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