According to analyst Josh Rager, bitcoin’s engine can sputter quickly. He expects BTC to drop by 30%, based on past declines. Rager analyzed nine previous instances of bitcoin’s dollar decline. All these cases resulted in a decrease of at least 30%.
Steel balls
It takes a bit of courage to expect a correction of 30% amid a nice bull run. The bitcoin price rose by more than 86% in 2020 and was even worth more than 14,000 dollars on Friday. That is the highest value since January 2018, when bitcoin had just had an all-time high of $ 20,000.
Many investors and traders agree that the bitcoin price rose to $ 14,000 as they are looking for a hedge against inflation.
More money undermines purchasing power
The increase in the number of corona infected and the potential impact on the global economy has prompted central banks to pursue unprecedented quantitative easing policies. More money enters the market, which ultimately undermines purchasing power. As a result, investors are actively migrating their cash reserves to relatively riskier, but scarcer assets, including stocks, gold and Bitcoin.
Since the start of the corona crisis, the bitcoin price has risen by 265%.
Correction is natural
Back to Rager’s tweet, he sees the correction as a natural and inevitable response to the current bull run. The dip is necessary to attract new investors and more money to the bitcoin market. They can then get the scarce bitcoin at a high discount.
Rager also says that he knows that the price will go up in the long term.
Companies step in
Most of these investments are expected to come from traditional companies. Bakkt president Adam White told the Wall Street Journal that hedge funds, brokerage houses and other mainstream trading companies are scrutinizing crypto and bitcoin. He reported that daily trades on their futures platform have increased from 1,300 at the end of 2019 to 8,700 in September 2020.
More and more examples are also being added, such as PayPal, MicroStrategy and Square.
American stimulus fund
Bitcoin is also made easy to survive a 30% correction. The market is waiting for a second stimulus package from the US government.
The fund is now in deadlock over tomorrow’s US presidential election. Economists agree that a clear victory for Joe Biden or Donald Trump would bring the stimulus deal out of its months-long deadlock. The market expects the US Congress to send at least $ 2 trillion.
A new stimulus fund could push the dollar’s value even further. And the value of the dollar and the rate of bitcoin are intertwined.
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