Bitcoin looks like it may suffer a gruelling correction in the coming weeks, according to eToro analyst Simon Peters.<\/p>\n
The entire cryptocurrency market experienced a notable pullback yesterday with Bitcoin falling to as low as $9,000 before finding a bounce.<\/p>\n
The move to the downside was replicated in traditional markets, with the S&P500 suffering a 6.77% plunge.<\/p>\n
The recent cryptoasset pullback coincides with a similar retraction in global equity markets. Peters said. It appears the narrative in markets has somewhat changed from potential recovery and reopening of economies post-lockdown, to a potential second COVID-19 wave, especially after several US states have reported a spike in coronavirus cases since reopening their local economies.<\/p>\n
Optimism has dissipated and realism has set in, in both the cryptoasset market and global stock markets. If we begin to see widespread second spikes of COVID-19, then it would probably cause another sell off across all markets. If the price drops below the $8,500 level, investors should be worried.<\/p>\n
He goes on to say that while a short-term Bitcoin correction may be difficult, it will be the beginning of a new bottom formation that will act as a platform for a rally into the second half of the year.<\/p>\n
He continued: With bitcoin there is always the possibility for a further drop, but its my view that we are seeing a new bottom begin to form. Fundamentals remain positive for the asset, especially given the recent Fed meeting and indication of continued economic stimulus and consistently close to zero interest rates.<\/p>\n
At the time of writing Bitcoin is trading at $9,453 with notable levels of support at both $9,000 and $8,830. Breaking below those levels would indicate a change in market sentiment with potential downside targets emerging as low as $7,100 while there is also a chance of a bounce at $7,800.<\/p>\n
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