Bitcoin has suffered its worst weekly candle since December 2018 after falling to $8,000 just days after Bakkt launched its Bitcoin futures product.
Price is currently being propped up by the 50 exponential moving average (EMA) on the weekly chart, which is residing at $7,850.
The recent price action is eerily reminiscent to that of December 2017, when Bitcoin dramatically dropped from $20,000 before making consecutive lower highs and eventually making a 70% move to the downside.
Another similarity is that a Bitcoin futures product was launched on both the CME and CBOE in 2017. The fact that institutional traders finally had the opportunity to short an illiquid asset like Bitcoin ended up driving the price much lower.
This time around, although Bakkt’s launch hasn’t been met with the expected volume, it was another event that could have tempted traders to ‘buy the rumour and sell the news’.
From a technical perspective, Bitcoin needs to remain above $7,900 with a preferable bounce above the 200 EMA on the daily chart, which is currently at $8,745.
This would indicate significant interest from buyers at this level and that a correction into the mid $6,000 range or even $5,200 is increasingly unlikely.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.