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Bitcoin May Not Hope For A Price Above $12 000 in 2020: 3 Factors That Indicate This

Bitcoin gave a hindrance, and market indicators are not playing in its favor. Can’t Bitcoin be able to regain its positions and 12 thousand dollars is the maximum for 2020?

Boomerang is back

The collapse of Bitcoin last week was a natural consequence of the rapid rise in the price of Bitcoin to $12 000 and may lead to another stagnation in the movement of the crypto asset. In just 9 days in September, Bitcoin fell by 2 thousand dollars, its price fell by 11.4%. For many traders, Bitcoin’s rollback was predictable. It is quite typical behavior for cryptocurrency after a sharp jump in price and “inflation” of investor activity.

Despite over-optimism in the DeFi market, some analysts warned at the end of July that there were factors that could negate all the summer achievements of Bitcoin and the crypto market in general. 

The extremely low volatility of Bitcoin

After the collapse in March, Bitcoin gradually entered the phase of the so-called “calm” low volatility. The price of Bitcoin has risen by 147% since “Black Thursday” on March 11, so the 11.4% decline in the Bitcoin exchange rate last week does not seem so serious at first glance. But it is worth considering the laws by which the cryptocurrency market operates: prolonged low volatility can provoke a “storm” and a sharp fluctuation in the price of a crypto asset.

Bitcoin volatility has not dropped below 5% over the past 8 weeks. This trend is the first time in the history of cryptocurrency, so it can be devastating. Today, Bitcoin follows the 2017 pattern of behavior. According to the latest data, as of September 1, the 3-month volatility of Bitcoin was 42%, which is almost identical to 2017.

Bitcoin is losing its dominance in the crypto market

2020 has been a test of confidence in Bitcoin. Statistics show that the flagship cryptocurrency has partially given way to altcoins: the dominance of Bitcoin has decreased from 69% to 59% over the past 4 months. A similar ratio in the crypto market between Bitcoin and altcoins was already observed in 2018 when tokens successfully “pulled” some investors over to their side.

Sellers increase the pressure

The fall in the price of Bitcoin was also triggered by a sharp increase in trading volumes in the options market. As of September 1, the ratio between call (buy) and pool (sell) options was 22%, up 78%, respectively. Open interest in selling Bitcoin options almost peaked in the last 12 months.

Thus, given the pressure of current market indicators, it is difficult to clearly define where Bitcoin will move next and whether it will be able to return to the $12,000 region again. However, analysts are also rejecting premature statements about the point of no return for Bitcoin, since the crypto asset has formed quite strong support levels in the $9,000 – $10,00 price region.