It’s a 'Matter of Time' Before Bitcoin Dips Below $6,000, Analyst Claims

Francisco Memoria

According to some traders, bitcoin’s mining costs saw it bottom out at the $6,000 mark as its months-long bearish trend supposedly came to an end. An analyst now argues it’s only a “matter of time” before the flagship cryptocurrency dips below said mark.

Through a blog post spotted by MarketWatch, Ziedins of CrackedMarket noted that while BTC has seen the $6,000 mark represent a firm support it bounced off of  numerous times in the past six months, every time it bounced it achieved a lower high.

Analysts usually see an asset in a bearish or at least neutral trend if it fails to achieve higher highs after bouncing off support levels. Ziedins stated:

First, we bounced to $17k. Then it was $12k. $10k came next. After that $8.5k. Earlier this month it was $7.5k and this weekend we stalled $6.8k. At this point, it is only a matter of time before we tumble under $6k support.

Bitcoin has been dropping since mid-December, after it hit an all-time high of nearly $20,000. This, despite numerous positive developments, which include the owner of the New York Stock Exchange (NYSE), the Intercontinental Exchange (ICE), launching a “global platform and ecosystem for digital assets” called Bakkt.

At press time, according to CryptoCompare data, bitcoin is trading at $6,450 after gaining 0.03% in the last 24-hour period. In the last 12 months, it’s still up by 65%.

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Most other cryptocurrencies have also been struggling. The XRP token has lost 2% of its value in the last 24 hours and is trading at $0.51, while Ethereum’s ether slipped 0.3% to $211. A few altcoins like EOS and LTC are marginally up.

Bitcoin cash (BCH) is notably been pushing the market up after rising 18% to $523. Some analysts believe the cryptocurrency’s price has been rising after Bitmain, a large BCH investor, filed for an application to launch an Initial Public Offering (IPO) on the Stock Exchange of Hong Kong Limited (SEHK).

While most cryptocurrencies are down so far this year, Wall Street analyst and bitcoin bull Tom Lee has earlier this month revealed he created an “altcoin correction index” that was at an all-time high. Per Lee, the last time it hit a new high, altcoins enjoyed a 7-week bull run.

Lee, the co-founder of Fundstrat Global Advisors, has been maintaining a $25,000 by the end of the year bitcoin price prediction throughout the bearish trend. The analyst has in the past used historical evidence to argue hodling makes sense, as the cryptocurrency sees most of its gains in only a few days every year.

How Bakkt Can Bring the Crypto Space an Institutional Investor Influx

Cryptocurrency enthusiasts have for years been waiting for institutional investors to enter the space. While the introduction of bitcoin futures contracts on regulated exchanges in late 2017 didn’t gain a lot of traction, but Bakkt may.

Bakkt is a long-awaited bitcoin futures exchange and on-boarding platform from the Intercontinental Exchange (ICE) - the parent company of the New York Stock Exchange – and it’s set to launch this year. Bakkt itself has remained tight-lipped over the precise launch date after delaying its launch last year, with ICE CEO Jeff Sprecher in February simply saying “later this year.”

It’s possible that this quarter may see the launch or at least more news about when the exchange is finally coming. At the end of March, Bakkt CEO Kelly Loeffler explained:

While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for bitcoin to the U.S.

Bakkt’s launch could be a major milestone for the cryptoasset industry. A venture backed by Microsoft and Starbucks, its institutional pedigree alone will switch many cautious investors on. Specifically, the firm is set to help consumers pay for goods and services with cryptocurrencies, with Starbucks being the flagship retailer in its arsenal.

Bakkt’s Bitcoin futures contracts will be the first physically-settled derivatives on a regulated trading platform. This means investors will receive the contract’s underlying asset, bitcoin, when it expires.

Currently the Chicago Mercantile Exchange (CME) offers cash-settled bitcoin futures contracts, meaning investors get the equivalent of BTC’s value in fiat when the contracts expire. This is seen by some as a major development in the cryptocurrency space, as it shows traditional finance is willing to interact with the nascent cryptoasset industry.

It’s worth noting that earlier this year the ICE’s CEO called Bakkt a “bit of a moonshot bet,”  as it was organized in a way “very different than the way ICE typically does business.” The firm has its own offices and management team, and could undergo more rounds of financing in the future.

Bakkt And a Potential Bitcoin ETF

What’s significant about Bakkt’s launch beyond this, is that it may bolster the chances of a Bitcoin Exchange-Traded fund (ETF) being approved. Such a product would make it easier for institutional investors to gain exposure to cryptocurrencies.

In August, the US Securities and Exchange Commission (SEC) rejected nine other ETF applications, in particular highlighting how those applying hadn’t provided evidence that “bitcoin futures markets are of significant size’” for an ETF to be launched.

Once Bakkt is launched its trading volumes may very well help quell the SEC’s concerns over the bitcoin futures markets’ small size as institutions and other investors may feel comfortable entering it. Larger futures contracts trading volume, increased liquidity and a well-established company involved may prove enough to convince the SEC that the time is right for a Bitcoin ETF.

Bakkt therefore represents a very significant milestone for a maturing cryptoasset industry and may well herald the “institutional influx” that many have been anticipating since 2017. Despite the markets remaining relatively flat throughout 2019 these looming decisions in the U.S. have the power to move the entire industry forward, for better or worse.