Bitcoin Drops Below $68,000: Can It Continue to Rise?

Bitcoin Drops Below $68,000: Can It Continue to Rise?Bitcoin plunged below the $68,000 mark on Wednesday, according to Coinglass data, following a peak of over $74,000 last week. The virtual currency market has witnessed over 100,000 liquidations during this recent pullback

Bitcoin Drops Below $68,000: Can It Continue to Rise?

Bitcoin plunged below the $68,000 mark on Wednesday, according to Coinglass data, following a peak of over $74,000 last week. The virtual currency market has witnessed over 100,000 liquidations during this recent pullback. Analysts widely believe that Bitcoin's recent surge was closely tied to the US election's outcome. During his campaign, Trump declared that if he returned to the White House, he would designate Bitcoin as a strategic reserve asset for the United States and transform the country into the "global cryptocurrency capital." Harris, on the other hand, opted for a path distinct from Biden's, vowing to support cryptocurrencies.

Can Bitcoin continue its ascent? Sathvik Vishwanath, co-founder and CEO of Unocoin, suggests that Bitcoin exhibits cyclical behavior, typically experiencing strong growth toward the end of the year. He predicts a similar pattern for 2024. Historical trends show that Bitcoin's average gains in October, November, and December are 26%, 36%, and 11%, respectively, supporting the optimistic outlook of Bitcoin potentially exceeding $100,000.

Looking ahead, bullish sentiment dominates the cryptocurrency market. Traders are aggressively increasing their bets on call options. Previous data indicates that call option exercise prices for November 8th expire at a concentration of $75,000, while those expiring on November 29th (open interest) are concentrated around $80,000. David Lawant, head of research at cryptocurrency brokerage FalconX, stated, "We believe the market consensus is that Bitcoin is likely to perform well regardless of the outcome of the US election. Team analysis reveals a distinct upward bias in options activity surrounding the upcoming election."

"Bitcoin simultaneously possesses financial, industrial, and technological attributes, being influenced to some extent by financial cyclical patterns, meaning every rise is followed by a fall," commented Yu Jianing, co-chair of the China Communications Industry Association Blockchain Special Committee. He believes that Bitcoin's price will likely exhibit heightened volatility in the near term, especially given the current climate of rising global macroeconomic uncertainty, inflationary pressures, and geopolitical tensions. Market sentiment is susceptible to external factors, leading to potential drastic price fluctuations.

In the medium to long term, Bitcoin's trajectory will depend on its intrinsic development factors, encompassing technological innovation, market demand, and policy regulation. The path ahead for Bitcoin isn't without potential hurdles. Nicholas Sciberras, senior analyst at CollectiveShift, points out that if Bitcoin becomes a continued target of government suppression and faces mounting regulatory pressure on its energy consumption, it could exert downward pressure on its long-term rise. Another long-term concern is how cryptocurrency security will be maintained in the face of reduced block rewards.

"Bitcoin, as a nascent investment, carries significant market risks. The possibility of substantial price fluctuations remains, and investors must be mindful of these risks," cautioned Cao Xiao, deputy dean of the School of Finance at Shanghai University of Finance and Economics.

Here's a more detailed breakdown of the article, categorized into five sections:

I. Bitcoin Price Fluctuations and the US Election

The article highlights the connection between recent Bitcoin price volatility and the unfolding US election. Both Trump and Harris have expressed support for cryptocurrencies, instilling optimism within the market regarding future cryptocurrency policies, thereby driving Bitcoin prices upward.

However, market uncertainties surrounding the election outcome and future policies have also contributed to Bitcoin's price fluctuations. In periods of heightened political risk, investors often adopt a wait-and-see approach, resulting in price corrections.

II. Bitcoin's Long-Term Trajectory: Cyclical Patterns and Potential Risks

Sathvik Vishwanath, co-founder and CEO of Unocoin, believes Bitcoin exhibits cyclical behavior, typically experiencing strong growth toward the end of the year. Historical data indicates that Bitcoin typically sees substantial gains in October, November, and December, bolstering the optimistic outlook of Bitcoin potentially exceeding $100,000.

However, the article also acknowledges potential challenges for Bitcoin's future. If governments continue to suppress Bitcoin or impose stricter regulations on its energy consumption, it could negatively impact Bitcoin's long-term growth. Furthermore, declining block rewards could pose a challenge to cryptocurrency security.

III. Market Sentiment and Options Trading

The article emphasizes the prevailing bullish sentiment within the cryptocurrency market, with traders actively increasing their bets on call options, further driving Bitcoin's price upward.

Options trading serves as a reflection of market expectations regarding future price movements. The surge in call options suggests a broad consensus within the market that Bitcoin prices will continue to climb.

IV. Chinese Expert Perspective: Volatility and Long-Term Development

Yu Jianing, co-chair of the China Communications Industry Association Blockchain Special Committee, believes that Bitcoin's price will likely exhibit heightened volatility in the short term. This volatility is attributed to factors like global macroeconomic uncertainty, inflationary pressures, and geopolitical tensions, all of which can influence market sentiment.

Yet, from a long-term perspective, Yu Jianing emphasizes that Bitcoin's trajectory will be determined by its own development factors, including technological innovation, market demand, and policy regulation.

V. Expert Reminder: Investment Risks

The article concludes with a reminder to investors that Bitcoin, as a nascent investment, carries significant market risks. The possibility of substantial price fluctuations remains, and investors must be cognizant of these risks.

In Summary:

The article delves into the factors influencing Bitcoin price fluctuations, including the US election, market sentiment, options trading, macroeconomic conditions, and policy regulations. It underscores the cyclicality of Bitcoin and its potential risks, urging investors to exercise caution.

Overall, the article provides a comprehensive analysis of Bitcoin price volatility and future trends, offering valuable insights and recommendations for consideration.