05.03.202116:16 Forex Analysis & Reviews: Bitcoin will continue its decline

Bitcoin has started to fall in price again, and we warned our readers about this scenario in previous articles. Just below, we will look at the technical aspects of the fall of the number 1 cryptocurrency in the world. Here we will consider why a correction that has been going on for two weeks can be not just a correction, but the beginning of a collapse. Let's start with the fact that bitcoin is growing according to the laws of the market. Demand is growing – bitcoin is also growing. And the demand is growing because the value of bitcoin is growing. It turns out to be a vicious circle. While the quotes are growing, more and more investors want to join the trend and make a profit. Very few small and large investors buy "digital gold" to diversify risks or to conduct calculations with it. Bitcoin is an investment tool, no matter what anyone says. Maybe in five or ten years, it will become "digital gold", the volatility will decrease, it will become more stable. Then it will be used as a full-fledged means of calculation or a means of preserving value. Or a means of risk diversification. However, so far, bitcoin is bought and mined in 90% of cases to make a profit from it. Thus, the bitcoin market is very "thin". One message from Elon Musk is enough for the exchange rate to increase by $ 5-10 thousand. But the same rule also works in the opposite direction. As soon as the bitcoin exchange rate begins to sink, investors begin to believe that the bullish trend is over and begin to get rid of the coins. After all, bitcoin has no fair value. It can cost as much as you want. Thus, its rate depends entirely on the mood of not even all its holders, but only 10-20%, which set the tone for the rest of the market. If 20% of the owners start selling the "cue ball", then an avalanche-like process will begin, in which everyone will get rid of it. Therefore, for the current correction not to become a collapse, bitcoin will need a new positive fundamental background. For example, tomorrow, Elon Musk will again say that he likes bitcoin, and Tesla will invest another $ 1.5 billion in it, and then investors can cheer up, believe in the preservation of the upward trend, and rush to buy cryptocurrency again. But if nothing like this happens, or the market simply does not believe it, then bitcoin will continue to fall.

On the daily timeframe, we can see that the price has adjusted by 61.8% in Fibonacci after falling from $ 58.5 thousand per coin. Thus, as we expected, a new round of correction has begun and within its framework, the price should reach at least the previous local minimum, which is about $ 43,000. At the same time, the support level, which according to many experts lies at the level of $ 44,000, should resist the onslaught of bears. If it does not stand, and bitcoin does not receive positive news, it can provoke a strong drop in quotes.