After taking a significant hammering by the US government and the current US CFTC (Commodities Futures Trading Commission) investigation into Bitfinex, the crypto space has been having its share of lower prices.
The bears it seems have come out again to play. At first sight, it might look like a reason for panic and many newbies would. But, on taking a second look, one would realize that the market is preparing for something major.
Bitcoin’s Final Stand
Whenever an asset or security is ranging, it means that a major rally in the opposite direction is about to take place. This happens when a previous trend had come to a halt and prices start to challenge that trend.
This is especially true where Bitcoin is concerned with its high volatility. The Long Bear rally of the past two years is about to end.
If you study the graph above, you’d realize that similar action prices which occurred around December 2017 that created the same downward channel (in the green lines) are occurring again!
From its high of $19,276.40 with a market capitalization of over 322 Billion Dollars, on the 17th of December, we all noticed that the market wasn’t driven by fundamental factors unlike now. Speculation was the order of the day.
IF you look at the market’s sharp swing between the $19,276.40 to $6,302.88 on the 6th of February, 2018, you can notice that the market itself wasn’t settled for a regular pattern of movement.
This period represented in the black circle shows that though the market was experiencing a reversal, it was not certain. Then a steady decline of prices followed showing everyone leaving the market.
Then on March 30th, 2019 when the cryptocurrency crossed the resistance levels at that state to $4,100.60 a steady creeping upwards started occurring.
Between March and June, nothing much was happening in the World while Bitcoin was busy leading the crypto-verse in reversing the trend and everyone was happy to be back in the playground. Then Bitcoin started attracting the wrong kind of attention.
This return of confidence hadn’t faced any fundamental challenges until the past few months when Libra, Donald Trump, Roubini (Dr. Doom) and a whole host of others started.
Then the same kind of volatility indicating that a trend is about to be formed when the fundamentals are completely in the right order started showing up.
Yes, volatility means confusion but the best traders and analysts know that it is what happens AFTER the confusion that matters.
This time, the price spikes are being driven by fundamental factors indicating the maturity of Bitcoin as an asset class. This is represented in the graph above with the red channel lines.
What is causing a lot of headache for most people is if the previous trend in the green channel lines will continue.
The truth is that with summer coming up, Bitcoin has become the US Government’s new toy which is going to affect prices a whole lot!
As for the kicker, a new support level driven by doubt and uncertainty is possible. But, prices will not go below a Fibonacci retracement level of $8,034.77.
This represents a 38.2 Retracement from the highest price of $13,000.77 (occurred on 10th July 2019) which is its actual resistance level.
However, if prices can remain above $10,10.5929 which represents 23.6% of the $13,000 mark, then the new trend would set in.
So, fret not folks!
What do you think Bitcoin’s new support level will be? Let us know in the comments below!