Bitcoin Might Be Poised To Drop Further
On Friday, the crypto market was shocked when Bitcoin suddenly flash crashed. Within an hour, the leading cryptocurrency fell from $7,800 to $6,100 on Bitstamp, as one entity seemingly triggered a massive sell-off with one large sell order, purportedly amounting to 5,000 BTC. While Bitcoin rapidly recovered, moving from $6,100 to $7,300 as of the time of writing, some fear that this move is entirely conducive to the crypto market’s short-term success. In other words, another drawdown might just be inbound.
Bravado analyst Bitcoin Jack recently he’s bearish until the leading cryptocurrency posts new year-to-date highs. He notes that the fact that BTC saw a large sell-off on high volumes, has begun to trend higher on dropping volumes and into a “mitigation block”, makes him wary of going long.
He further explained his thoughts on a Discord post, in which he stated that Bitcoin’s rapid plunge on Friday is likely not a shakeout. Jack explains that the fact that BTC traded between $7,800 and $8,400 for days on end implies a top, and that BTC falling under a short-term resistance of $6,770 on Friday is a sign that “we might eventually sell-off further down.” Indeed, Bitcoin breaking under a key short-term resistance level isn’t a reassuring sign for bulls.
Jack isn’t the only analyst worried. As reported by Ethereum World News yesterday, Fawad Razaqzada, an analyst at Forex.com, explained to MarketWatch that this move confirms that the cryptocurrency market is susceptible to such volatility spikes, which are a common sight in nascent markets.
He goes on to stay that Bitcoin remains “extremely ‘overbought’ in the short-term,” and may need to correct (even further), or at least consolidate, before posting further gains. The fact of the matter is, with this move, BTC rapidly spiked under its parabolic trend higher, which was somewhat expected, and lost its footing at some key support levels.
On the fundamental side, some are sure that this crash confirms that BTC remains very illiquid and malleable to manipulation, thereby hurting how retail investors and institutional investors alike see cryptocurrency.
Not So Fast
Some have been a tad more optimistic though. In a recent eye-opening tweet, popular analyst Filb Filb, known for his astute market observations (he predicted the rally to $5,000), posted the two charts, seen below.
As he points out, Bitcoin’s current inverse chart looks eerily similar to the same chart seen from late-2014 to 2016, during which BTC capitulated, traded in an accumulation range for months, broke out above the level, and threw back to a key support level. If history rhymes to a tee, BTC will further bounce from here to trade between $6,000 and $8,000 for a number of months, then skyrocket to new heights as the block reward halving arrives in mid-2020. In fact, if history is followed, 2020 will be when the next parabolic run is started, during which some analysts estimate that Bitcoin could breach $100,000 apiece.
Title Image Courtesy of Marco Verch On Flickr