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On-chain metrics can offer valuable insights into Bitcoin market movements and the latest data is showing that unrealized losses are mounting up. This could lead to a larger selloff as those that bought the dip in late 2018 fear for loss of profits now.

Bitcoin Selloff Resumes

Following the weekend’s push to close in on $8k, there has been a slide of almost 8% as the king of crypto retreats for the seventh time since late June. The correction from this year’s peak is currently 48% and analysts are suggesting that it is not over yet.

Chances of a ‘Santa rally’ are dwindling as the asset looks set to dip into the $6k region again this week. There may well be no recovery until the halving approaches in six months’ time, and that may even take a while to gather momentum.

On-chain data has been used to analyze estimated cost basis and 45% of investors are currently in the red. CIO of Point-Slope Capital Chris Russi has been looking at the figures and they do not bode well.

“While it’s been quite a drawdown from the ~$13k top in June, I still expect slightly more pain to push that # closer to ≥50% until we trend up again.”

A 50% figure would have a BTC price of around $6k which is where a number of technical analysts expect it to go. Mid-$5ks could also be possible as that is where the asset held for a month before initiating its huge rally up to $13,800.

Russi speculated that the largest capitulators have been those that bought the top. This was exactly what happened after the massive boom in early 2018, day traders dumping for fear of losing too much.

“Biggest capitulators during the draw down period have been top buyers @ ~$12K, recent dip buyers at ~$7.5K-$8K, and people locking in profits from catching the earlier bottom @ $3-$6k”

A scarier thought is another big selloff initiated by those that bought Bitcoin during the depths of crypto winter when it spent five months trading below $6k.

This would negate the premise that there has been more hodling occurring this time around and that institutional players have been stock piling the asset for product liquidity.

It stands to reason that anyone lucky enough to time the exact market bottom (which was just below $3,200 on December 15, 2018) would have been selling on the way up and would not have waited until now to offload.

A higher low is expected which would confirm that the long term trend is still intact and BTC is still heading upwards despite these massive peaks and toughs. If Bitcoin drops back into the $3k zone then the bear market that started almost two years ago is still not over.

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Martin Young , 2019-12-04 07:04:32

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.

While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

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Nick Chong , 2019-11-10 12:00:38

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