Bitcoin price is very much in a free fall and investors and traders have only two questions in their mind and that is why the bitcoin which is supposed to be an ultimate safe haven is crashing and how far the price can really go before we will see any kind of realistic buying pressure
If you take a glance around the marketplaces, you will see that there is only one colour that really stands out, and that colour is red. Because the Nasdaq index's futures have been trading over 6% lower for most of the morning and have already entered correction territory, equity markets in the United States are in a state of free collapse. Bitcoin prices, which failed to record gains and in fact built more losses on top of the last week, are also in free fall today. When Donald Trump gave his speech at the Bitcoin conference, there was a lot of optimism around bitcoin and its future, as many traders were thinking that this will become the reserve currency of the future. Of course, all of this was predicated on the assumption that Donald Trump would become the President of the United States of America and institute a national reserve for bitcoin. On the other hand, the Republicans strongly oppose bitcoin. Following the conference, the government transferred a significant amount of bitcoin from various projects to a wallet, causing anxiety among investors. This was due to traders' belief that selling such a substantial amount would lead to a significant sell-off.
One of the key reasons that bitcoin price has been selling have been mentioned already and that is the fear that investors and traders have that the US government could be selling the huge amount of Bitcoin that it confiscated from shame projects. If they hit the market, the price would crash. We saw similar fear in the market when the MitGox started to give bitcoin back to its shareholders.
But the other reason that the sell off has become very intense is purely because of fears that traders and investors have due to the volatility that bitcoin represents. The beast has the ability to move more than 20% in a day and on a day like this, traders and investors do not generally feel like holding volatile assets.
Thirdly, the main reason that we have seen this sell off is due to the fact the market is in the free fall and traders have selling bitcoin to cover their margin call or to provide extra safety net to their portfolios in terms of ranching up cash.
Looking at this week’s selloff, there is certainly a possibility that the prices may go down a bit more before we actually see an improvement in the price action. If the question is how far the price can drop, it can easily drop another 10% from its current level, but it won't alter the gold price's long-term trend, which remains strongly skewed to the upside. The horizontal price line indicates the next significant support level in the price action, which is near the 40K price mark, while the resistance holds at the high of the previous weeks.