2020 has been a pretty crazy and surprising year for everyone. In the cryptocurrency world, no one expected Bitcoin after a recovery and uptrend to drop to its 2018 lows in a single day. This fall was significant, and that for no one is a secret. But let’s take a look at what could happen to Bitcoin in the near future.
Bitcoin of the future
On March 12, a day that many investors now refer to as “Black Thursday,” Bitcoin saw unprecedented price action. This event will likely leave an eternal imprint on the memory of Bitcoin investors for the future.
After dropping from its mid-February highs of $ 10,500, BTC had found some stability within the $ 8,000 region. This was the precedent for a mass sale, which resulted in the drop we all know.
This event is said to have been the demonstration of capitulation in the market. This is a period of exaggerated price declines at the end of a bear market. It is the point of maximum pain for all those who have bought at much higher prices.
Then, if we analyze the data provided by Skew, we will notice that Bitcoin fell below $ 4,000 and then rebounded to over $ 5,000 the next day. This marks a complicated trend for Bitcoin in the future. This resulted in more than $ 1.6 billion in settlements at BitMEX.
Furthermore, this appears to have led to an exodus of market investors. Specifically, Bitcoin’s open interest in BitMEX plummeted by 40% after the move according to Skew research.
What does this mean for Bitcoin in the near future?
Historically, capitulation precedes the establishment of long-term funds. This notion is supported by BTC’s rally from these mid-March lows to the region of $ 7,000, almost up 100%.
Looking at recent Skew data, open interest in BitMEX remains stagnant. This suggests that traders that were negatively affected by this volatility are still unsure of what to expect.
However, retail investors still seem to have confidence in the Bitcoin market for the future, as TokenAnalyst data shows that exchanges have not seen abnormal BTC outflows in the past 30 days. This is a sign that investors are not running away from the market.
This reveals something super optimistic for Bitcoin for the future. If Bitcoin continues to push higher as buyers attempt to recoup their recent losses, it will further reinforce the idea that $ 3,800 is a long-term fund.
Furthermore, we could say that this capitulation threw traders over leveraged, who will now have to re-enter the market to catch the next uptrend.