Bitcoin Nears Critical Support
We'll have to wait and see what happens once the cryptocurrency hits its most critical support level in a long, long time
A month or so ago on the 9th of May, I had anticipated a massive wave of correction in Bitcoin when it was still trading at upwards of $9,000. The mercurial cryptocurrency has since corrected nearly 30% in the past five weeks.
As the mood within the Crypto trading community becomes increasingly circumspect, even confirmed Bitcoin aficionados are now beginning to question its place in their "investment portfolios".
It's no coincidence that the unravelling of Bitcoin commenced almost exactly in tandem with the introduction of Bitcoin Futures in on 10th December, 2017. I suspect that many money managers held bearish views about Bitcoin as it bafflingly rocketed towards the $ 20,000 mark late last year; but were unable to 'put their money where their mouth is', so to speak. Futures, as we know, allow for better price discovery - and its quite safe to say that the market has spoken!
To make matters worse, the incoming news flows related to Bitcoin have been anything but agreeable. The US Commodity Futures Trading Commission has reportedly sent subpoenas to four cryptocurrency exchanges asking for trading data, suspecting price manipulation. Additionally, South Korean Bitcoin Exchange CoinRal suffered a hackover the weekend. Phew.
Technically speaking, BTC is nearing its most critical support level since the start of the year (the lower Bollinger Band on the weekly chart). This, in USD terms, would correspond roughly to 5975-6025 levels. The heavily oversold momentum suggests that Bitcoin will likely take a bit of a breather at those levels. But then what?
In the absence of any positive incoming Bitcoin related news flows, it's unlikely that we'll see any kind of a serious bounce coming in at those levels. The fact is that if it does break down violently below the $ 6,000 mark (either in this wave or the next), we're likely going to see much deeper cuts in the times to come. But then again - we'll have to wait and see what happens once the cryptocurrency hits its most critical support level in a long, long time.