Bitcoin Stumbles 76 Days before Halving: Reasons and Outlook
Bitcoin lost significantly in value since Sunday. A connection with the coronavirus is rather unlikely. 76 days before the halving, investors are nervous.
Bitcoin’s bull run seems to be over – at least for now. After the price broke through the $10,000-mark last week, it stands at $9,161 this morning (February 26, 2020).
On Monday afternoon alone, Bitcoin lost more than 3% in value – Ethereum (ETH) also lost 3%, Ripple (XRP) dropped 5%, and Bitcoin Cash (BCH) was down almost 7%. On Tuesday, the downward trend continued with Bitcoin losing again about 3%, while ETH, XRP, and BCH fell by 6% each.
Despite the correction, Bitcoin was still an excellent investment this year. The asset is up almost 30% compared to its year-end price in 2019.
Uncertainty prior to the halving: Investors didn’t trust the bull market
Analysts put forward various explanations for the recent price drop: The asset was unable to stay above $10,000 for long, so investors had doubts about the sustainability of the uptrend. On Sunday, when Bitcoin failed to break through the $10,000-mark for the fourth day in a row, investors saw their distrust confirmed and started selling the asset. When the price dropped below $9,500 on Tuesday, stop-loss orders sent it further down the charts.
Other analysts see a connection between the crypto sell-off and the losses in traditional asset classes due to the coronavirus. Global equities lost value when the virus reached more than 30 countries worldwide.
This explanation, however, contradicts previous observations, as Bitcoin has so far shown no correlation with other asset classes. Based on Bitcoin’s historic behavior, losses in other asset classes should have little or no impact on the price of Bitcoin.
Investors on the lookout for undervalued Bitcoin
Bitcoin’s retreat could be temporary, as investors may choose to buy the dip two months before the upcoming Bitcoin Halving.
Glassnode’s analysts, for example, refer to the MVRZ-Score, which is supposed to indicate the price of an asset relative to its fair value. The score determines over- (red) and under- (green) valuations of the Bitcoin price. According to Glassnode’s analysis, Bitcoin has “much room to grow” at its current valuation.