TL;DR A pause at the 200 weekly moving average and a bit of a pump, but the Trend is still down.
Bitcoin made new lows last week, dropping down out of its falling wedge and under $3,200. This is a key level, because it represents the 200 weekly moving average. Bitcoin has rarely ever traded beneath this long-term indicator, and the last time was around the end of the last bear market early in 2015.
Back in January 2015, BTC fell below the 200 WMA but the week closed above it, with just a long wick breaching that line. In this case, the same happened – we dropped a few dollars below it, as far down as $3,122 (Bitstamp) but ultimately closed above. The difference this time is that we did not see a characteristic capitulation spike, with high volumes. In fact, volumes are down, and the downtrend remains incomplete.
After numerous attempts to break old support at $3,250, which has proven strong resistance, bitcoin did leap higher yesterday, breaking not just one but two support levels. It faltered right where we’d expect, on strong prior support at $3,600. This morning it dropped back down below $3,500. Volatility and volumes are increasing again after a period of calm, shaking out those traders who finally think they’ve got the market figured out. But bitcoin chews them up and spits them out every time.
Should it push back up again to break $3,600, there’s further resistance at $4,600-4,700 – though that’s a long way from here – and ultimately the $5,700–$6k zone that proved so strong on the way down.
As we’ve noted before, this market keeps people guessing. When shorts pile up, a squeeze to flush them out is all too common. The price spikes upwards – over $350 in total yesterday – shorters who set their stops too low get margin called, and then price quickly drops again to continue its downward slide from where it left off. Ultimately, we’re still targeting down in the low $2k zone for the end of the bear market. We’d need to see dramatically higher prices on very high volume to call it over (as Crypto Twitter is doing).
One year ago today, bitcoin was just coming off its all-time high of $19,736. In other news, the Bear has been taking its toll. Substratum, a distributed computing resources platform, is running low on the ICO funds they collected last year. They have started daytrading what remains of their ICO money in an attempt to accumulate further capital. One response to their announcement was to suggest that they should short SUB…
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