According to investment experts, the sudden drop in the crypto market on Friday, which caused some cryptocurrencies to fall by 95% in less than a day, was not a sign of a deterioration in fundamental indicators.
“We believe that this crash was caused by a combination of several technical factors, including excessive leverage in the market. It does not have long-term consequences. A technical correction is long overdue; we believe that the first cryptocurrency remains strong. We are optimistic,” analysts at The Kobeissi Letter said.
The market’s liquidity was low at the end of the week, which created a favorable foundation for increased cryptocurrency volatility and sharp, panicked fluctuations, the experts explained. Such volatility spikes often serve as the starting point for the formation of new support levels and the influx of capital from investors waiting for favorable entry points. These situations often lead to a gradual recovery in price and an intensification of the upward trend, according to The Kobeissi Letter.
Additionally, the Bitcoin market has historically demonstrated the ability to quickly adapt to short-term stress events. Long-term investors continue to adhere to the accumulation strategy, which creates steady demand and increases the likelihood of an early reversal of the negative trend, analysts hope.
Earlier, TradingView platform analyst Dick Dandy suggested that in the foreseeable future, the bitcoin market could collapse, and the price of the first cryptocurrency could fall back to the values of the first half of 2024 or even below the $50,000 mark.
