A new strain of COVID-19 has brought down the price of bitcoin. But this is still not a bearish trend, analysts say.
The first wave of COVID-19 caused BTC to plummet below $5K in March 2020. The new dangerous South African variant COVID Omicron appearance could really put pressure on the cryptocurrency market. However, in March 2020, this effect was short-lived. Experts expect that bitcoin will not go to a long-term drop now either.
The decline to the lowest level in two months is the result of investor nervous reaction to the COVID Omicron. This movement does not reflect market processes. A drop to the $50K support level is possible but unlikely. A rebound of more than 5% confirms the optimistic forecast. A breakthrough could push BTC to $61K- $64K, analysts said. However, there are several negative factors that increase volatility.
First of all, it is a statement of the People’s Bank of China on further tightening in the cryptocurrency area. Now it is going about a system for tracking cryptocurrency transactions, which have been banned in China since the end of September.
Another negative factor is the information the anti-crisis stimulus program in the United States will be shortened earlier than planned. According to the statement by economists at Goldman Sachs, published by Bloomberg, the asset purchase program may end in March 2022, and three rate hikes are planned for next year. As a result, the dollar is expected to strengthen and inflation to decline, so investment in cryptocurrencies will decrease.
Anyway, popular trader Michaël van de Poppe believes that despite the cryptocurrency market dropping now along with the fiat markets, the bullish trend remains. The expert notes:
– I’m still very sure that the markets are not going to have a bear market at this stage. I think we are still eager for continuation in a bullish manner, but I do realize that the lengthening cycle’s most likely going to take place.
Popular analyst PlanB has revised his previous bitcoin forecast. The author of the S2F (stock-to-flow) model predicted earlier a BTC price of $98K until the end of November. He now states that the S2F pattern is still valid, but will work over longer time frames. Meanwhile, the $100K price will be reached in the coming months. The expert notes on Twitter:
– S2F model not affected and indeed on track towards $100K.
The fall to local lows was a good opportunity to buy BTC. This opportunity was realized, in particular, by EL Salvador’s President Nayib Bukele. He said on Twitter that he “bought the coins at a discount.” Since September, bitcoin has become the official currency in El Salvador along with the US dollar. The country’s government is constantly buying BTC. Now another 100 BTC has been bought.