The price of a Bitcoin has come off in recent trading sessions leading to a discount of over 25% from the close of $19,499 just over a week ago. At time of writing Bitcoin had rallied back to a little over $14,000 per coin but we have seen trading as low as $11,000 in the days leading into Christmas.
It’s not clear exactly why the selloff, however, it’s clear that it’s a selloff across currencies, not just Bitcoin, which doesn’t fit with the narrative that some coiners would like to see which is that confidence is moving from Bitcoin to Bitcoin Cash. Ether, Ripple and most of the other top alt coins have all had corrections in the past week.
Some are pointing to the rapidly increasing costs of transactions catching up with investors as a reality check on the practicality of the Bitcoin blockchain.
Whatever the reason for the drop, the recent price correction might be setting up a bear trap for investors where short sellers looking for the initial signals of a dramatic fall will be gearing up their positions. Personally, I think that may be a little hasty.
What is a ‘Bear Trap’
A bear trap is a false signal that the rising trend of a stock or index has reversed when it has not. A bear trap prompts traders to place shorts on the stock or index, since they expect the underlying to decline in value. However, instead of declining further, the investment stays flat, or slightly recovers.
Read more: Bear Trap https://www.investopedia.com/terms/b/beartrap.asp#ixzz52LaiYcbh
In the past few months Bitcoin has become somewhat of a hysteria with most people having come across it in their social media feeds, dinner conversations and eager coiners around the water cooler at work. It’s achieved its own subculture as demonstrated by the increasing number of comedians and entertainers using it as a muse for their latest skits.
This flood of public interest is still playing out in the market and is accelerating as it captures the imagination of joe public. This is evident in a) the increasing number of new wallets being created and b) the increased google search volumes as shown in the following charts.
Lots to play out still but my guess is that bitcoin will see all new highs in 2018.