Bitcoin (BTC) is currently trading at around $7,050 following a 6% decrease in price since last Monday.
Over the past 24 hours, BTC is down close to 1%.
BTC broke most of its support levels during a huge sell-off in November as the coin looked to be free falling.
However, the world’s largest cryptocurrency found support near $6,700 and bounced back up to $7,800 before consolidating around $7,500 last week.
During the weekend though, BTC took another dip that pushed price below key volume-resistance levels.
Will BTC drop further soon?
Let’s take a look at Bitcoin’s chart, courtesy of TradingView.
At the time of writing, Bitcoin is still on a short-term bearish trend. Since price has been consolidating for the last few days, I now expect a significant price movement sometime within the week.
I’m more inclined to think we’ll see a move to the downside, even though there’s a chance for a massive pump in the event fresh cash comes into the market.
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 still around 30% down from October’s high of $10,350 and close to 50% down from the yearly high in June.
In addition, BTC has broken below its 200-day EMA, and all its EMAs have now crossed to the downside – another bearish signal.
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 increased around 12% to $17 billion. This means we could be starting to enter the end of the short-term accumulation cycle and price action could either pump or dump.
For the time being, as mentioned above, there’s a chance it can go either way. As long as price continues to record lower lows, that’s a bearish sign. I’m patiently waiting for a reversal signal.
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.
Safe trades!
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.
If you want to find out more information about Bitcoin or cryptocurrencies in general, then use the search box at the top of this page. Here’s an article to get you started.
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.
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