Analyst Points to Bull and Bear Scenarios as Bitcoin Price Drops Below $56,000

A drop back below $56,000 today has raised eyebrows among traders amid calm calls for a collective deep breath and a step back to see what the long-term future holds for the Bitcoin (BTC) price and the broader cryptocurrency market.

Data from Cointelegraph Markets Pro and TradingView show that after starting the week close to $60,000, a few days of bears’ assault on the bitcoin price led to a return to $55,600.

Here's what analysts have to say about Bitcoin's latest price action, and what to watch out for in the days ahead.

Keep an eye on the monthly closing price

Independent market analyst "Rekt Capital" discussed Bitcoin's monthly price action, and the chart below he released shows that BTC is close to recapturing an important monthly close near $58,728.

According to Rekt Capital, BTC’s price action has been “promising” so far and is now “really close to retaking support at this monthly level (in green),” but the analysis cautioned that as the market struggled in November, In the end, there may still be large fluctuations in the near future.

Rekt Capital says:

“But it’s important to note that BTC remains prone to such zigzags for the rest of the month. The monthly close is what matters.”

Mt.Gox trustees will distribute 145,000 BTC

David Lifchitz, managing partner and chief investment officer of ExoAlpha, conducted an in-depth analysis of the possible reasons behind the pullback. He pointed out that on November 16, the trustee of Mt. About 145,000 BTC were distributed to retail investors who passed BTC.

Lifchitz highlighted some people's concerns that with BTC 100 times higher than the original purchase price, many of these "ordinary investors" will receive a windfall in the near future, "and they may cash it out at any price." , when news of the allocation breaks out, it could be quite a hit to the market."

As for now, Lifchitz feels that “at the $57,000 to $58,000 support level, the sell-off appears to be over,” and looks “ready to reach levels above $63,000 again in the coming days.”

However, according to Lifchitz, caution is needed going forward as there is a possibility of a sell-off once Mt.Gox BTC is released.

Lifchitz says:

"However, Mt. Gox is a sword of Damocles over the head of the market. I don't think BTC will rise to $100,000 next month under this threat. Whales have been doing little action for a while, and have not bought much (bit Gox). I guess they are well aware of the upcoming events in Mt.Gox and waiting to buy in the potential imminent huge dip. Now, once the barrier of Mt.Gox is cleared, Bitcoin will have a clear path to reach new highs, barring some crazy regulation that might spoil the party."

Historical Analysis Suggests Bitcoin Price May Have Bottom

A final bit of insight was provided by analyst and anonymous Twitter user "TechDev," who posted the following chart comparing Bitcoin's price action in 2017 to the current market.

According to TechDev, the current correction is "following what happened in mid-November 2017, close to perfect," with "the only minor difference being a break above the 50-day simple moving average (SMA)."

TechDev said:

“We may not have bottomed yet, but we’re close. Everything I’ve seen suggests that the next 5-15 weeks are likely to be massive (both BTC and altcoin mania).”

At present, the market capitalization of the entire cryptocurrency is 2.51 trillion US dollars, and the dominance rate of Bitcoin is 41.9%.