Bitcoin experienced an apparent technical correction just one day after it soared to its biggest one-day trading range since January 2018.
The biggest cryptocurrency by market value is currently trading at $11,780, showing a 15% drop from the 17-month high of $13,880 reached on Wednesday.
The pullback comes after bitcoin’s 90-degree price rise from $7,500 to $13,800 in the 17 days through June 26. The decline looks more and more like a technical correction.
Indicators showed extremely overbought conditions in the last 24 hours. The widely followed 14-week relative strength index hovered at levels last hit in January 2018.
On the other hand, bitcoin was still 183% higher on a quarter-on-quarter basis. This was its best three-month performance since the final quarter of 2017.
Analysts noted that the magnitude of the daily price move brought back memories of the cryptocurrency market boom in January 2018.
On the charts, volatility is seen to have surged in the second quarter. It may also remain high in the coming months, with experts forecasting a parabolic rise to fresh record highs of more than $20,000.
Bitcoin is expected to see a deeper short-term correction in the next day or another, based on intraday charts.
Bitcoin Price’s Fuels
A number of factors have driven bitcoin’s rise.
For one, Facebook said last week that it was launching a digital currency called Libra next year. The social media company said that it was partnering with companies like Visa and Uber Technologies.
A huge chunk of the investing populace took this as a sign that more and more mainstream institutions are accepting cryptocurrencies further, along with the underpinning blockchain technology.
For altcoins, MoneyGram International recently said that it struck a deal with Ripple to use the altcoin for payments. Ripple also acquired some stakes in MoneyGram.
Bitmain Technologies, which is a cryptocurrency mining-chip firm, was reportedly planning an initial public offering.
Investors are also jumping in to ride the wave, pushing bitcoin prices higher.
Bitcoin and Libra
According to experts, Facebook’s Libra is more different from bitcoin that markets like to admit.
“Libra is backed by a reserve of real assets – such as bank deposits and Treasury bills. That gives it intrinsic value,” said an analyst from CMC Markets.
She added cryptocurrencies like bitcoin are backed by nothing.
“While I understand the excitement for the community that a company like Facebook, backed by other big names, has launched its own coin, this just feels a lot like last time and we all know what happened then,” said a senior analyst from Oanda.
“Perhaps this time the drop-off won’t be so bad as we are seeing more mainstream adoption, but it may be naïve to think that it can’t come crashing down again,” added the analyst.