Bitcoin (BTC) is currently trading at just below $7,330 following a substantial 6% drop in price since Friday.
BTC broke most of its support levels during November as the coin looked to be free falling.
However, BTC found support near $6,700 last week and bounced back up to around $7,800 before dropping again.
Will BTC recover soon?
Let’s take a look at Bitcoin’s chart, courtesy of TradingView.
At the time of writing, Bitcoin is on a very bearish trend. Lower highs are giving way to significant price drops.
Since the massive bull market that took Bitcoin close to $14,000 earlier in the year, the coin has been dropping in value following a downtrend that was only broken in late October when price surprisingly broke through a number of key resistance levels (around the 200-day, 50-day, and 20-day EMAs).
Bitcoin is now about 35% down from October’s high of $10,350 and close to 50% down from the yearly high in June.
Last month, I said I expected BTC to find a bottom near its 200-day EMA and that Bitcoin would bounce to around $10,000. BTC has instead broken below its 200-day EMA and there isn’t much support volume to stop another fall.
If the $6,700 level was to be broken, the next stop for BTC, if the volume profile is to be believed, is just above $5,000.
History shows us that BTC is prone to huge drops between 30% and 40% during bull seasons. Therefore, I don’t advise that you fight the trend, but surf it for as long as possible.
Last week, I underlined that within the next three to five weeks, we could see a major reversal after a period of serious accumulation by ‘hodlers’. We’re still in an accumulation phase and the current downtrend is proof.
Volume has dropped to around $17 billion as a result of the consolidation period. This means there is still a lot of room for a further drop if volume picks up again.
As veteran traders and investors usually say, smart money “buys when there’s blood on the streets”. I’ve been saying for the past month that I’m waiting for major drops to make new entries. Moments like these are highly welcomed and appreciated.
I strongly believe Bitcoin to be a long-term store of value, especially as traditional markets continue to show weaknesses.
How can the markets continue to push higher throughout the year after the ECB’s recent rate cuts, the continuous share buybacks from huge corporations, or the inverted bond yield shoving investors away towards riskier assets?
In addition, repo market activity – as in loans from central banks to commercial and investment banks – has spiked to new monthly records. That adds up to another signal of weakness for the general economy.
In conclusion, investors and traders should pay attention to the overall economic panorama, as it will most likely be a major catalyst for worldwide BTC adoption.
Current live Bitcoin pricing information and interactive charts are available on our site 24 hours a day. The ticker bar at the bottom of every page on our site has the latest Bitcoin price. Pricing is also available in a range of different currency equivalents:
US Dollar – BTCtoUSD
British Pound Sterling – BTCtoGBP
Japanese Yen – BTCtoJPY
Euro – BTCtoEUR
Australian Dollar – BTCtoAUD
Russian Rouble – BTCtoRUB
In August 2008, the domain name bitcoin.org was registered. On 31st October 2008, a paper was published called “Bitcoin: A Peer-to-Peer Electronic Cash System”. This was authored by Satoshi Nakamoto, the inventor of Bitcoin. To date, no one knows who this person, or people, are.
The paper outlined a method of using a P2P network for electronic transactions without “relying on trust”. On 3rd January 2009, the Bitcoin network came into existence. Nakamoto mined block number “0” (or the “genesis block”), which had a reward of 50 Bitcoins.
As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice.
BTC broke most of its support levels during November as the coin […]