Cryptocurrency Markets are Fragile and Panic, Tom Lee Says
The cryptocurrency market traders are panicked after the bloodbath that wiped off more than $60 billion in the past few days alone. The market surprisingly slid steeply to the lowest level in the past 14 months without experiencing any change in fundamental or technical factors.
Bitcoin, the largest coin based on market cap, plunged to $4,200 before paring some losses in late Tuesday trading. The BTC coin is back to the $4,500 level – down 29% in the past seven days, and the price is off 75% from an all-time high that it achieved at the beginning of the year.
The price drop comes after stable price movements in the past two months. Bitcoin traded in the range of $6,500 from early September to mid-October while the total cryptocurrency market cap was trading around $220 billion in the past two months.
Panic has Created the Selloff, Tom Lee Says
The global stock markets are in a bear trend, and the US markets are losing significant value over the past few weeks. Oil price is tanking, and tech stocks are tumbling. Tom Lee claims Bitcoin may be feeling the effect of a bearish trend in global stock markets.
“Markets around the world are fragile, and panic and sentiment are playing a disproportionate role right now,” Tom Lee, co-founder of Fundstrat Global Advisors, told CNBC Tuesday. “Does this mean [B]itcoin is broken? No. The use case is still there, but in the short term, panics are panics,” he added.
The analyst says panic selling and the drop below the $6,000 level triggered “stop losses” – which increased selling pressure on crypto markets.
Tom Lee also pointed out the impact of SEC decision of increasing regulations in crypto markets. The SEC has decided to ramp up legal actions against irregularities and frauds in cryptocurrency markets.
Do the Coins Found the Floor?
Bitcoin’s price hit almost the $4,200 level during the latest selloff before paring some losses. Some analysts are expecting the market to fall further in the days to come while others are seeing the dip as buying opportunity. Nigel Green, the founder and chief executive of financial advisory group deVere, claims it’s the last buying opportunity for investors in 2018.
Does panic selling play a role in creating a bearish trend? Do you believe the drop is presenting a perfect buying opportunity? Express your opinion in the comment section below.