Bitcoin Stumbles Under $10,000
Earlier today, Bitcoin (BTC) finally fell under $10,000 after a week of pure tumult. Despite the fact that this occurrence was brief, with the asset only remaining under the key psychological resistance/support for minutes, maybe even seconds, many were disturbed by the loss of $10,000. But, what exactly is next for the cryptocurrency, which is down by 9.7% in the past 24 hours as of the time of writing this?
Well, as long as Bitcoin manages not to fall dramatically, many expect for BTC to consolidate in a large trading range. As analyst CL points out, since becoming a liquid, tradable asset, Bitcoin has tended to consolidate for months on end at key psychological price points — these being the powers of 10, $1, $10, $100, $1,000, and $10,000 of course. When BTC found itself at parity with the dollar, it took 77 days for it to break out. Each consolidation period has been anywhere from three to six months.
So, if history is of any indication, BTC is likely to stabilize around current levels. According to popular cryptocurrency-centric Youtuber Omar Bham, the range that Bitcoin will find itself in will be $8,800 and $14,000 — which are notably the top of May’s trading range and top of June’s trading range respectively. Bham backs his prediction by citing “data from traders [he is] inclined to trust over others.”
From a simple technical standpoint, this would make sense. $14,000 is around where a key Fibonacci Retracement level lies, presumably making it a good top for Bitcoin in the short term.
Some, however, are wary that a stronger correction is well on its way. Just the other day, Bitcoin closed its daily candle, which also happened to line up with the weekly, monthly, and quarterly close. In other words — Sunday’s performance was key. The thing is, BTC didn’t rise to the occasion.
As Nunya Bizniz, a popular trader, points out, the daily close saw BTC fail to hold a key parabola that has held for over six months. This is notable, as the origin of this move stretches back to Bitcoin’s bottom of $3,150. Bravado’s lead analyst, Bitcoin Jack, adds that this parabola break marks a rejection of the fifth acceleration of this trend, which comes shortly after BTC broke the sixth and the seventh. The commentator quips that if BTC retests the fifth (~$11,800) and fails to break past it in the coming days, he would be inclined to enter into a “high time frame short”.
For those not aware of price action in financial markets, an asset’s inability to hold a long-standing parabolic trend is often seen as a very bearish trend. In Bitcoin’s case, each time it failed to hold a parabola, a correction of over 80% from the top was commonplace.
Photo by André François McKenzie on Unsplash
