The price of bitcoin abruptly dropped to $8,100 in less than 5 minutes on June 1, before rallying to settle on the $8,600 mark. This erratic price movement came as nearly $140M worth of long contracts were liquidated on Bitstamp exchange.
Even more shockingly, the pullback merely came 16 hours after BTC surged to $10,400, but the top crypto has since stabilized to trade at the $9,500 mark at press time.
The sudden price drop reportedly trapped many traders on the wrong side of the market, especially as an erratic outage on San Francisco-based exchange Coinbase left many users unable to trade.
Technically, the fall in the price of bitcoin from $10,000 to $8,600 was a perfect liquidity grab, and some believe that the number one crypto is likely to recover at $9,400, which has in the recent past proven to be a strong support level.
What’s Next For Bitcoin?
Moving forward, an essential gauge on the direction BTC will go is institutional investors’ appetite in the CME bitcoin options markets.
Grayscale Bitcoin Trust (GBTC), an elaborate bitcoin investment vehicle, has also been accumulating BTC at a rate equivalent to 150% of the new coins generated by miners since the recent May 11 halving event.
According to Grayscale’s 1Q report, 90% of such inflow came from institutional investors, indicating that the latest BTC price retreat is unlikely to deter investors, who trust in bitcoin’s long-term value as a safe haven asset.
Moreover, nearly 60% of bitcoin’s supply hasn’t changed hands in over a year, likely sign investors are holding in expectation of gains.
Each of these indicators should be closely monitored, but as of now, there are very almost no signs of weakness from institutional investors’ flow.
On a cautionary note, John Bollinger, a prominent technical analyst known for making the indicator the “Bollinger bands,” warned the twitter crypto community that BTC investors should be cautious or short at current prices as more volatility is expected in coming days.
Top Analysts Still Bullish on ETH
As of June 1, Ethereum (ETH) was up 25% in weekly trading. However, the cryptocurrency market saw a harsh correction on Tuesday as most top digital assets such as BTC and ETH, experienced losses in major markets.
Despite this, some remain optimistic about crypto, Ethereum especially. For instance, crypto analyst GalaxyBTC stated in a recent tweet:
“As I don’t believe this dip is the end of all crypto, I’m patiently waiting too long, low $200 $ETH into $300 by the end of the month.”
Similar optimistic sentiments came from an analysis by Ryan Sean Adams, founder of Mythos Capital. He noted that ETH is “doubly” undervalued, observing that the transaction fees collected by miners on the ETH blockchain have spiked sharply in recent weeks.
This is significant because, according to the Mythos Capital founder, the value of ETH has, over the last five years, shown a close correlation with the transaction fees collected by miners.
Indeed, ETH continues to display a bullish trend subsequent to its remarkable breakout above $219 last Friday.
The number two crypto is currently trading at the $238 level, which is close to the high witnessed just before the dramatic sell-off on March 12 in the now notorious “Black Thursday crash.”