Since peaking at the key $8,400 resistance just the other day, the price of BTC has plunged by 8%, tumbling to $7,800 as of the time of writing this article.
Although some say it is too early to tell that this recent drop is indicative of an impending full-fledged bearish trend, some analysts have begun to fear the worst.
Bitcoin Chart Prints Number of Bearish Signs
Firstly, the rejection at $8,400 purportedly marked a strong blow to Bitcoin bulls as that price level has historically been of utmost importance.
Josh Rager, a prominent cryptocurrency analyst, for instance, pointed out that $8,400 has been both a key level of support and resistance for Bitcoin over the past few months. Per Rager, BTC’s inability to regain that level on any notable time frames is a sign that we are “not out of the bear woods yet.”
Price had an initial rejection off key area $8400s that previously as resistance/support
Watching for a pullback $7800s-$7900s before a bounce and push to the upside for retest
Not out of the bear woods yet, take it level by level, day by day pic.twitter.com/Vby6KexBIQ
— Josh Rager (@Josh_Rager) January 8, 2020
$8,400 also lines up with Bitcoin’s 20-week simple moving average, which is a level that has been key in indicating macro reversal points for BTC over the past 18 months.
Case in point: one week after Bitcoin passed above this moving average in March of 2019, the cryptocurrency shot 25% higher, sparking the mini bull run that brought the cryptocurrency to $14,000.
The simple fact that Bitcoin failed to move above this line, currently sitting at $8,500, is a sign to some analysts that a move back to the $6,000s will be had in the coming weeks.
The technical indicators also suggest more downside in the coming days. Trader CryptoHamster noted that the one-day Bitcoin chart has printed a confluence of harrowing signs: this week’s volume peak was at the price top of $8,450, implying buyer exhaustion; the Tom Demark Sequential has printed a green “8” candle, often followed by strong reversals of a green “9” is printed the day after; the Average Directional Movement indicator
That drop below 23.6% Fibo looks bad.
– widening formation (uncertainty)
– the volume peak was at the top
– TD sequential green “8” (if next is “9” – a sign of a drop)
– ADX is below 25 (the rising trend is weak)
– a Fisher Transform bearish crossover$BTC $BTCUSD #bitcoin pic.twitter.com/lrIdCCvWgv
— CryptoHamster (@CryptoHamsterIO) January 10, 2020
2020 Still Will Be a Good Year Bitcoin
While there is a bear case that continues to grow by the second, analysts are sure that 2020 will still be a great year for Bitcoin and the broader cryptocurrency industry due to namely fundamental factors.
Firstly, a recent conflict has erupted between the U.S. and Iran over the killing of Iranian General Qassem Soleimani in an airstrike. Michael Novogratz, a former Goldman Sachs partner and current CEO of Galaxy Digital, has said that this event has him bullish on “gold and BTC.”
The investor elaborated by writing what he expects to happen on a geopolitical scale in the coming weeks. Slightly paraphrased, he wrote: “Iran will begin to expel U.S. troops. Iran will have more influence in Iraq, which is what they want. The Saudis don’t want conflict. Due to all this, the Middle East will become less stable, creating more volatility in global markets.”
The idea with Novogratz’s comments being that in times of geopolitical and macroeconomic instability, Bitcoin should rise due to the asset being seen as decentralized, non-sovereign, and scarce — just like gold.
Secondly, this year will see the Bitcoin block reward cut in half, simply meaning that the inflation of the cryptocurrency should be cut in half. Analysts suggest that this shock to the supply-demand economics of the BTC markets should push the price dramatically higher over time, no matter what the technical indicators suggest.
And lastly, there’s been a steady increase in institutional involvement in the cryptocurrency space, leading some like Binance CEO Changpeng “CZ” Zhao to claim Bitcoin will see a positive year.
The post Market Takes a Breather after Bitcoin Fails to Break Key Level: 2020 Still Looking Good appeared first on Blockonomi.