After the carnage of the end of last week, it’s been a fairly quiet weekend for bitcoin — but that never lasts for long, especially not at the moment.
To recap, last week saw a brutal fall in the value of bitcoin from $7,400 down to a low of just over $6,100. While that was a ‘higher low’ that didn’t break the previous low of $5,877 (Bitfinex), itself higher than June’s low of $5,755, it was still an dramatic move that caught many traders unaware.
While mainstream media reported the immediate trigger was Goldman Sachs’ decision to shelve their plans for a crypto trading desk, when Goldman denied this as ‘fake news’ the price failed to recover. As we reported, a far more likely explanation are the $10 million in BTC that were sent from an old wallet, somehow connected to the Silk Road, to Binance and Bitfinex at the very end of last month.
While that’s not much in the context of overall volumes, it is a lot when dumped at market rates on a single exchange. The crash was most likely a catalyst for further selling by traders and the lower prices that followed. However, it’s worth saying that even this volume of coins wouldn’t have been a problem if the market hadn’t already been at a fragile point in its recovery. Traders didn’t have the confidence to absorb the sells, instead bailing out before matters got any worse. In short, the recovery up to $7,400 had been too fast. It was looking promising, and perhaps it would have continued and gained momentum, but the Silk Road coins had the effect of a bucket of cold water.
Since the initial falls, the market stabilised somewhat around $6,400. We then saw a ‘Double Bart’ formation, with a crash-consolidation-spike followed by the reverse spike-consolidation-crash. Right now bitcoin sits at $6,270, but that figure is likely to be out of date in minutes.
Zooming out to the daily chart, we can see that the 200 MA is really coming down fast now, since the price on a large number of the last 200 days has been beneath it. The 50 MA, which reacts more quickly, of course, is heading south even faster — but conversely it picks up more quickly too with a recovery. Price is well below both, indicating downward momentum. However, resistance around the $6,000 zone has once again held, demonstrating the strength of demand here. RSI has come off its lows, indicating deceleration of downward movement. That’s hardly surprising after such massive selling, though: on the 4h chart, RSI signalled BTC was more oversold than at any point since June.
In short, a day of reckoning is on the way. The downward-sloping resistance line that has held since February will soon meet the demand zone at $6,000. One will give. That must happen in the next month — and it’s highly unlikely the pattern will play to the end without a breakout.
Traders will rightly be cautious here. If it does go south in a meaningful way, lots of analysts are talking about $5,000, but this is a point where both big risk and big opportunity lie. $6k has proved a demand level many times before. On the other hand, markets are inherently unpredictable and Mr Silk has plenty more BTC to dump. If you buy, be prepared to HODL or set a tight stop loss.
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Quite technical article covering the entire week which had been full of FUD and panic selling dragging the crypto prices nearing the bottom.
The Acclaim Token(ACM) from GCOX just finished their 1st ITS and it was over subscribe 156%, they going to launch their 2nd ITS soon. This is a quite new concept project, may have a look :)
https://gcox.com/