Last night the price of Bitcoin dropped to about 40,000 USD for a brief moment.
At the opening of trading on the Chinese Hong Kong stock exchange after the weekend closure, it was still around 43,300 USD, but half an hour later it started to decline.
Within about ten minutes, it suddenly dropped to 40,300 USD, and then immediately bounced back and rose above 42,000 USD.
The movement occurred while the Hong Kong stock market was falling.
Summary
The Chinese market and the movement of the Bitcoin price in USD
It is very likely that this descent was primarily generated by the Chinese market. Not surprisingly, it happened while the Hong Kong stock exchange was falling.
The Hong Kong stock market opened down 1.1% tonight, but about two hours after the opening, the decline had reached 2.2%.
Later it slightly recovered, closing at -0.8%.
The drop in the first two hours was significant, and it is very likely not a coincidence that at that moment the price of Bitcoin dropped to 40,000 USD.
In fact, a small rebound occurred afterwards, which allowed both the Hong Kong stock exchange and Bitcoin to recover some of the losses.
It should be noted that today’s level of the Hang Seng index is the lowest of 2023, leading to year-to-date losses of -18%. However, it should be added that this level is still 10% higher than last year’s bear-market low reached in early November.
Since part of the recent increases in the price of Bitcoin have been generated by the Chinese markets, it is not surprising that today’s decline has affected its price. However, today the Shanghai stock exchange closed with a +0.7%, although still close to the lows of 2023.
The price of Bitcoin
Today’s drop in the price of Bitcoin is neither abnormal nor worrisome.
In fact, last week ended with a record, namely eight consecutive weeks of positive closures.
Since 2013, there haven’t been any better results in this regard, so it was to be expected that this week might not end positively.
Although the week is not yet completely closed, and it is not possible to exclude further increases, a closing in loss would seem to be the most likely thing today.
Moreover, in the last eleven days it has risen from 37,000 USD to 44,000 USD, only to return today to 42,000 USD, which is still a level 12% higher than the beginning of the month.
Actually, compared to the 27,000 USD of mid-October, the accumulated gain until yesterday was 65% in less than two months, and today it has only dropped to 57%. However, these are still very high profits, which suggest that today’s correction may not even be completely finished.
The two scenarios
Given that from here until the end of the year it is unlikely that the price of Bitcoin will remain stable, the two scenarios that seem most likely are a further decline or a further rise.
The key point at this moment seems to be the $35,000, as comparing the trend of the fourth Bitcoin cycle (the one still ongoing) with that of the previous two cycles, this is exactly the price level that one would expect during the next April’s halving.
The first scenario is the one that predicts a return to 35,000 USD, between the end of December and the first half of January, perhaps followed by a lateralization around this threshold until after the halving in April. Taking into consideration the historical series of the past, this should theoretically be the most likely scenario.
However, the trend in these last months of 2023 does not resemble at all that of the end of 2019 or the end of 2015, which were the two previous pre-halving years. On the contrary, it seems decidedly more similar to that of 2016, which was the year of the second halving and the one preceding the great bull run of 2017.
In fact, the second scenario is the one that predicts a further rise in the price of BTC to over $45,000 by the end of December, and over $50,000, or even $60,000, in January.
This second scenario would make it possible to trigger a new major bull run one year ahead of schedule.
The hypothesis of Bitcoin (USD) price retracement
Actually, the hypothesis that seems to be the most popular is the first one, namely the retracement.
In fact, even in 2019 there was a significant price increase, followed by a retracement that brought the price back to approximately half of the previous all-time high.
However, that increase occurred in the middle of the year, between May and June, while no significant increase occurred in November and December.
The hypothesis of an imminent retracement considers the increase in November and December as a sort of delayed replication of the mid-2019 increase, since it was Facebook that triggered it back then, while this year it was BlackRock.
A key moment to understand which of the two scenarios will be happening will be the next three days, as tomorrow the data on inflation in the USA for November will be published, and on Wednesday the Fed will update its monetary policy on interest rates.
