New Delhi (CoinChapter.com) — Bitcoin is going through a strong bearish correction phase. And, according to a market analyst, the sell-off momentum might take the flagship cryptocurrency to as low as $20,000.
In retrospect, the cryptocurrency market capitalization, on the whole, lost roughly $830 billion in a downside correction led by the kingpin Bitcoin. As the market heals from the bearish aftermath, Bitcoin has been behind its rival tokens, including Ethereum, MATIC, etc., when it comes to posting rebound profits. It is choppy at its best.
Crypto investor and analyst Chalexov assessed the latest Bitcoin price movements and said that the BTC/USD exchange rate could reach $20,000 in the coming sessions. The crypto loyalist speculates that most altcoins will decline in the aftermath of BTC’s decline.
Bitcoin has not seen a strong rally since the crash. Though it has touched the $40,000-mark multiple times lately, it has met with bearish rejections after unable to claim the level as support.
What’s Keeping Bitcoin From Recovering?
Ironically, Elon Musk, whose company Tesla added $1.5 billion worth of BTC to its balance sheets, turned on the cryptocurrency for its poor environmental credits. The billionaire entrepreneur also reversed his decision to accept Bitcoin payments for Tesla’s electric vehicles, leading many to fear he would have the company unload its entire Bitcoin collection.
That triggered a fall in the prices of BTC almost immediately.
Next came China’s crackdown on cryptocurrency mining, which caused BTC prices to go further downhill on May 19. Meanwhile, Inner Mongolia, an autonomous region within China, recently outlined its plans to ban crypto mining. Iran also banned mining for 4 months after cities suffered blackouts.
Bitcoin's NVT plot. Source: BTCUSD on Tradingview.com
Bitcoin also faced overvaluation risks following its 1,500 percent-plus price rally from its March 2020 nadir of $3,858.
The crash and the subsequent monetary losses have created a profit-taking mindset. BTC prices fell by almost 50% from their ATH, reaching a low of $29463. Once the recovery started, investors sold their coins whenever they reached a new benchmark to recuperate some of their losses. As a result, the price falls every time it reaches a new high.
Not Everything is Bleak
Some bullish tailwinds for Bitcoin come in the form of its acceptance at BNY Mellon, Mastercard, PayPal, Goldman Sachs, JPMorgan, Morgan Stanley, and many other Wall Street giants. That serves as an indicator that Bitcoin is growing as an institutional asset.
Also, the recent meeting between Elon Musk and leading crypto miners helped the crypto’s cause. Although criticized as being against crypto’s decentralizing principles, markets welcomed miners’ decision to adopt greener methods for mining.