Bitcoin: Is A Second Big Drop Looming?

With what word would you define bitcoin? Revolution? Bubble? Miracle? Future? The list is huge but I, for the moment, stay with Volatility. For those less savvy in financial terminology, when we speak of volatility we refer to both the frequency and the intensity of changes in the value of a specific asset. The lower the volatility, the higher the reliability, but also the lower the profitability. Higher volatility signals higher risks, but also the possibility of a higher profit (or losing everything, of course).

That is the reason why many financial regulators, such as the National Securities Market Commission in Spain, oblige entities that market investment funds to offer future investors an information sheet called Doccupancy of key investor information (DFI), and include in it the investment risk profile, with a value between 1 (minimum risk) to 7 (maximum risk). Obviously, to establish this note, not only volatility is taken into account, but it is a very important element in the calculation.

A quick look at bitcoin’s history shows us that its rate of change, at times, has been comparable to the profile of a roller coaster (and surely many of your investors have felt as if they had stepped up to one). In mid-December 2017, bitcoin was sold for more than 16,000 euros, but at that time a fall began that caused it to dismiss the year at around 10,000, and a little less than a year later its value was less than 3,000 euros . Many thought, at the time, that the bitcoin bubble had burst.

However, since March of last year and as if it had undergone a complete treatment with steroids, bitcoin has climbed a virtual Everest that, week after week, has been adding new all-time highs, in a path that has caused it to exceed 47,000 euros a week ago now. However, just six days later, his change in recent days it has dropped to around 37,000 euros. A decrease of around 23% in a week, surely the sale of blood pressure monitors has exploded in certain areas.

Now, of course, the question is whether this decline is a specific movement or, on the contrary, indicates the beginning of something worse, and according to we can read in fortune, short-term outlook for bitcoin doesn’t look too positive. According to the analysis outlined in said text, investors are targeting safer assets, leaving aside investments subject to greater volatility and risk, such as bitcoin.

If this reading, which also affects other cryptocurrencies such as Ethereum, is confirmed, the steep decline this week could be just the beginning, giving rise to a second crack similar to that of Christmas 2017 in which, after the abrupt fall these days, the value of bitcoin maintains a downward path that can last for months, and we do not know how far it can go. It does not seem at all likely that it will reach minimums lower than those of the 2018-2020 period, but it is enough for it to get a little closer to them, so that its depreciation compared to the maximum of a week ago is a clear sign of the risks of cybercurrencies.

The most positive reading we can get from this, yes, is that a hit of bitcoin, ethereum and others translates into the graphics card market could see some reliefBecause in these circumstances, miners will surely rethink their investments and take their foot off the gas a little, making it easier for end consumers to acquire them. There is no evil that for good does not come, right?


Source: MuyComputer by www.muycomputer.com.

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