Bitcoin needed correction after the break of the key resistance levels. The market is still far from “euphoria,” which can push the price of the cryptocurrency to the $86,000 mark next year. Such conclusions are contained in the report of Stack Funds.
Analysts called the recent decline in the price of bitcoin by several thousand dollars at once moderate. In their opinion, market participants are still at the stage of “faith,” which will eventually turn into “euphoria.”
The study is based on Glassnode data on unrealized gains and losses. The corresponding graph is based on the ratio of the current price of bitcoin to the market value of coins at the time of their last movement.
According to the Stack Funds methodology, “euphoria” corresponds to indicator values above 0.75 (at the time of writing, it is at 0.60, which means “faith”).
“Optimism “corresponds to a range of values from 0.25 to 0.50, and “hope” — 0-0.25. Anything below 0 is “capitulation.”
The price of bitcoin moved to the “faith” stage in October, breaking the 0.50 mark. The market was at this stage for the entire 2017 year, during which the price of bitcoin increased by more than 20 times.
“Currently, the indicator indicates that the market only recently jumped into a new wave, moved to the stage of “faith” at the end of October. Extrapolating data from the previous bull cycle, even if a quarter of the 2250% movement, will indicate a rise in the price of bitcoin to $86,000 next year,” the report says.
Many analysts share the opinion of Stack Funds. Mati Greenspan, the founder of Quantum Economics, considers the recent correction commonplace.
“A rollback of 17% is quite banal for this stage of the market cycle.”
The Twitter account teklordz wrote that the correction was essential before a new, possibly even more impressive price pump.
Some market participants are confident that the next bitcoin correction will open up good entry points for altcoin trading supporters.
At the time of writing, the first cryptocurrency is trading around $17,770. The price has been consolidating for several days in a row after a rapid drop from the $19,000 level.