By CCN: The bitcoin price will crash again soon because the latest rally was merely a dead cat bounce and not because the cryptocurrency’s fundamentals are strengthening. That’s what Motley Fool blogger Kevin Godbold contends.
In his May 26 blog post, Godbold observed that the bitcoin price has soared more than 120% between January’s low of $3,400 to its current value of $8,700. However, Godbold attributes that to a dead cat bounce, so crypto fans shouldn’t get too smug.
As CCN reported, a dead cat bounce is a temporary recovery after an extended bear market that’s followed by a prolonged downturn. It comes from the adage that “even a dead cat will bounce if it falls fast enough.”
Blogger: ‘Bitcoin Looks Riskier Than Ever’
Godbold insists that the recent bitcoin price spike was merely due to speculators who went on a buying spree during its recent crash. However, he says that’ll end soon because speculators will run out of steam.
“The buying probably caused the share price to move up. A little at first, but seeing the movement, others maybe started saying, “bitcoin’s moving” and more buying happened. And because of that, bitcoin went higher. And the higher it went, the more the momentum speculators piled in. And the more they piled in, the higher bitcoin moved.
“I think that description is the essence of what causes a dead-cat bounce. Nothing has changed in the case for or against bitcoin, but speculation happened.