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Could Bitcoin have fallen below $ 3,000?

Cryptocurrency

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Before
to start the analysis, it is necessary to understand that each exchange has a
independent quotation. This applies to the different countries and currencies where Bitcoin
is negotiated, but also within the same region.

Already
we had some flash crashes, or
that is, sharp and rapid drops in the Bitcoin price. The effect is stronger
when quoted in less liquid pairs, but even in Dollar or Tether already
we saw drops of 20% or more in a matter of seconds.

Flash crash at Kraken, Canadian Dollar quote, May 2019
Flash crash at Binance, quotation in Binance USD, September 2019

This one
type of failure stems from the execution of an order much larger than the total
purchase offers, or through any technical failure. O flash crash is characterized by a quick return to a plateau
close to the original price.

The recent drop to USD 3,800

Nothing
prevents the price on different exchanges from trading below USD 3,000 for some
hours, or even days, especially when there is a fear of a global crisis
or uncertainties about Coronavirus, for example.

O
USD 3,000 level is not an estimate, but a floor determined by the
period that became known as “crypt winter” in late 2018, in addition to
to have functioned as a support in September 2017 when China banned
exchanges and ICOs in the region.

What prevents you from falling below that?

THE
unwillingness of the holders, or "holders", to sell at these levels. Valley
note that the quote of USD 3,000 results in the market capitalization of USD
55 billion, equivalent to 0.6% of the total gold in circulation.

This one
plateau will likely continue to function as long as we have a number
enough of people who believe in the potential of Bitcoin, its history of 11
years maintaining the rules of emission, free circulation, protection of the network
miners, in addition to the strong social consensus brought by users who run
their nodes.

Conclusion

Excluding
a catastrophic scenario of temporary closure of major exchanges
international bankruptcy of banks or large corporations, it would be difficult
believe in keeping the Bitcoin price below USD 3,000.

Remember that even gold, considered the best hedge instrument, or protection, is falling by 6.5% in dollars in March. We are undoubtedly going through moments of uncertainty, but it is possible to remain optimistic with Bitcoin's security and anti-inflationary policy thesis.


About the author

José Artur Ribeiro is CEO at Coinext. Economist graduated from Università di Roma (Italy) and investor in cryptocurrencies since 2014. He has more than 15 years of experience in leadership positions. He was CFO of Hexagon Mining and CFO of Vodafone Brasil. He also worked for multinationals such as Airbus Industries (France) and PricewaterhouseCoopers (Italy and Brazil).

Disclaimer - OBN is an informational website which aims to give the latest blockchain related news to the readers. Articles on OBN should not be considered as investment advice. Trading cryptocurrencies is a high-risk investment, every user is advised to consult an expert before making any decisions.