Volatility in the cryptocurrency market is something somewhat expected. Aside from the price swing, however, the community’s opinions and predictions could change just as quickly.
For instance, Bitcoin, and the rest of the cryptocurrency market, went through a severe nosedive a few days ago, which brought the price of the largest digital asset to as low as $3,600 on BitMEX. All of a sudden, most popular influencers switched their previous bullish views to a full-on bear mode.
A few weeks ago, Bitcoin was flirting with the coveted $10,000 mark. The coronavirus outbreak, however, had its adverse effect on all financial markets, including crypto, and they all plummeted.
At it generally happens, when the prices start to tumble, so does the collective opinions and views on the matter. Most crypto influencers who predicted that we would never witness “Bitcoin price below $10,000 again,” suddenly changed their outtake on the situation and now they foresee another significant drop. We collected just a few:
Bearish on an inverted scale.$BTC pic.twitter.com/3MfRecz0Qz
— Squeeze (@cryptoSqueeze) March 14, 2020
Looking at this piece of shit monthly, I don’t really feel like buying the bottom at all, even if the price is at $3000, $1500
This savage dump violated a consensus that was built over a 8 year period
It might take another 8 years to rebuild confidence in BTC pic.twitter.com/LMqIpswjn0
— ๑ RAMEN ๑ (@NoodleofBinance) March 14, 2020
Shorted $btc and $eth for now.
— The Crypto Dog📈 (@TheCryptoDog) March 14, 2020
A big part of $BTC selling off is due to a panacked marketplace where traders are looking to get into cash
That same cash isn’t going to be flowing back into Bitcoin anytime soon
So unless stocks rally, or you convince your entire town to buy Bitcoin
Don’t expect a rally soon
— Josh Rager 📈 (@Josh_Rager) March 14, 2020
The famous Bitcoin proponent and host of the Let’s Talk Bitcoin podcast, Andreas Antonopoulos, brought out a compelling perspective on who and why might be selling-off. He pointed out that institutional investors and mainstream adopters are not prepared to handle the violent price developments, and ultimately, they dump it.
As the cryptocurrency market is decentralized and lacks regulation, significant drops of over 30% in a day are entirely possible. The same cannot be said about the traditional financial markets, where regulators can quickly stop trading in fears of more substantial price decreases.
You wanted “institutional investors” and “mainstream adoption”?
This is what it looks like: Absent the principles of decentralization, traded as a high-volatility asset to add “spice” to a portfolio.
As soon as price gets uncomfortable, they drop it like a hot potato. We don’t.
— Andreas ☮ 🌈 ⚛ ⚖ 🌐 📡 📖 📹 🔑 🛩 (@aantonop) March 13, 2020
Most influencers are following the trend – when the prices are increasing, so are their predictions and vice-versa. The vast majority of influences feed their audience with what they want to hear, or what is trending now. It’s hard to express an unpopular opinion against the majority. In this regard, we can mention Antonopoulos, who spoke about the above prediction two months ago, not only now, as the crisis arrived.
After all, back in December 2017, when Bitcoin reached its all-time high of nearly $20,000, the community top-tweets were speaking about Bitcoin to $32,000, $50,000, $100,000, and even more. How many tweets predicted Bitcoin at $3,000 during 2018? Only a few.
So what is happening now is quite ordinary: Before Bitcoin broke below $8,000, the general sentiment was quite bullish, and nobody saw $3,600 in BTC’s very-near future. Now, the Fear and Greed Index is buried in “extreme fear,” as most of the community believes Bitcoin price at $1,800 is in grasps, rather than at $9,000.
It’s worth noting, though, that just because most influencers change their minds as quickly as the price swings, doesn’t necessarily mean that Bitcoin will now surge. It only means that they create background noises out of thin air. However, it’s still entirely possible that Bitcoin continues to decrease.
Yet, nobody has a crystal ball and can make 100% accurate predictions; after all, Bitcoin is facing the first major financial crisis in its short 11-years old life.
Traders should try to remove the background noise and focus on their own views on the matter. Bitcoin can go up or down despite what most influencers believe or say.