Despite a slight bounce Friday morning, some analysts don’t expect bitcoin to chart a quick recovery from the double-digit price drop over the last two days. You can see the dynamics of the movement of any cryptocurrency on the Olymp Trade exchange.
Bitcoin fell by over 10% on Thursday to $10,006, according to CoinDesk’s Bitcoin Price Index.
That’s the biggest single-day percentage decline since March 12 when bitcoin prices crashed around 40% amid a major sell-off across the equities markets. To buy or sell cryptocurrency at a bargain price, use the Pepperstone exchange.
Other data sources such as Bitstamp even logged bitcoin as dropping a little below $10,000.
At the press-time price of $10,520, the cryptocurrency is down 18.59% from the recent high of $12,476 registered on Aug. 17.
Similar double-digit price pullbacks observed in April and May were quickly reversed in a couple of days, a sign of buy-the-dip mentality.
This time, though, a quick V-shaped recovery back to recent highs around $12,000 looks unlikely due to cryptocurrency’s increased sensitivity to traditional markets.
“The worst may be behind us, but bitcoin can take days to form a good base,” crypto analyst Edward Morra, who called the market top at $12,000, tweeted early on Friday.
Matthew Dibb, co-founder, and COO of Stack, a provider of cryptocurrency trackers and funds, told CoinDesk that prices could drop below $10,000 if the global equity markets retrace.
“Macro factors are currently at play, and bitcoin shows a higher correlation to global equities markets in this ‘risk-off’ period,” Dibb said.
Indeed, sharp losses on Wall Street look to have accentuated the bitcoin price drop on Thursday.
Stocks may extend the sell-off, pushing bitcoin below $10,000 on Friday if the all-important U.S. non-farm payrolls report shows the labor recovery is losing momentum.
The data, scheduled for release at 12:30 UTC, is forecast to show the economy added 1.4 million jobs in August versus 1.76 million additions in July.
Joel Kruger, a currency strategist at LMAX Group and macro trader at MarketPunks also sees scope for additional price declines on the back of risk aversion in equity markets.
“The next key support comes in the form of the June low at around $8,900,” Kruger told CoinDesk in a Telegram chat.
However, he still expects bitcoin will eventually realize its potential as a store of value.
Additionally, activity in the bitcoin options market suggests investors are adding bets to position for an extended decline in the cryptocurrency.
The one-month and three-month put-call skews have recovered sharply to positive territory this week.
That’s probably due to investors buying put options (bearish bets) to hedge buy positions in the spot/futures market, according to Vishal Shah, an options trader and founder of Polychain-backed derivatives exchange Alpha5.