Bitcoin Suffers From Weekend Volatility Again: How Are Analysts Responding?
Once again, for the second weekend in a row, the past few days saw Bitcoin whipsaw back and forth as the cryptocurrency market turned volatile.
The chart below best illustrates this, as it shows Bitcoin’s sudden Saturday evening spike to $9,950 from $9,600, then the subsequent flash crash from the daily high of $10,030 to as low as $9,580 just 24 hours later.
Analysts are currently divided over what this recent volatile price action means for the cryptocurrency market’s short-term outlook.
The Bearish Argument
Joe McCann, a prominent cryptocurrency trader who works as a Cloud and AI strategist at Microsoft, recently gave five reasons why he is short-term bearish on Bitcoin in his Telegram channel. They are as follows
- Bitcoin’s flash crash earlier this week that brought it from $10,300 to as low as $9,250 in a few hours’ time suggests the short-term trend is flipping bearish.
- BTC’s rally on Sunday was a “melt up” based on low volumes, suggesting weakness and exhaustion on the end of bulls.
- On Sunday, the funding rate on BitMEX and other margin exchanges was “overly positive,” spiking higher when prices attempted to move higher. This suggested that longs were then overleveraged, then presumably deleveraged when the price crashed to $9,700 just hours ago.
- Bitcoin hasn’t been able to close above the key Fibonacci Retracement level of $10,180.
- BTC has remained the lower Bollinger Band on the daily chart for five days now, seeing rejections at the 20-day simple moving average, meaning “sellers [are] in control.”
There’s also the below chart from analyst Smart Contracter, the trader who in the middle of 2018 wrote that he expected for Bitcoin to bottom around $3,200 (it did just months later). The chart depicts the analyst’s opinion that Litecoin is currently forming a bearish wave pattern that is likely to see the cryptocurrency fall by over 10%.
i like tracking $ltc as a guage for alt strength, its done me well in the past.
this whole weekend price action feels like a wave B flat to me and a deeper wave C is still yet to come.
im basically flat now and just not liking the vibes im getting from the majors RN pic.twitter.com/Pav6BY2D1V
—
Benjamin Blunts
(@SmartContracter) February 23, 2020
This is relevant for BTC because LTC has proven that it acts as a bit of a bellwether for the cryptocurrency market. Case in point: it was the only cryptocurrency rallying in early-2019, surging by dozens of percent every few weeks as Bitcoin was flatlining around $4,000.
This means that should LTC fall, so too should Bitcoin.
The Bullish Argument
While there are these bearish factors, some have said that the medium-term bull trend remains intact.
Well-known industry content Josh Rager posted the below chart in the wake of Bitcoin’s recent drop to $9,600. He suggested that the move isn’t as bearish as some painted it out to be, noting that BTC “dropped and bounced near the weekly/daily support around $9,580.”
This is important because $9,500 has been absolutely essential for bulls over the past few weeks and even months, with the level acting as an inflection point for this market. Indeed, $9,500 was the price at which BTC topped in September/October’s “China pump.”
Price dropped & bounced near the weekly/daily support around $9580
Holding above the $9550s is a good sign on higher time frames and breaking below the $9300s will still flip bear bias
Lower time frames in down channel but weekly chart still not confirmed trend reversal pic.twitter.com/vCZzAajReD
— Josh Rager
(@Josh_Rager) February 24, 2020
BTC managing to hold it for the umpteenth time in a matter of days bodes well for the bull case.
Also, Trader Smokey, a popular market commentator, noted that the four-hour Ichimoku Cloud for Bitcoin is “starting to turn bullish again,” adding that there are other “good signs” on the same chart. He added that the 12-hour Kumo level of the Ichimoku Cloud is “holding beautifully,” while the MACD is showing signs it will see a positive cross.
Bitcoin’s Long-Term Trend Remains Positive
Whatever happens in the short term, the general consensus amongst the industry’s top analysts and investors is that Bitcoin remains decisively bullish on a long-term basis.
Per previous reports from Blockonomi, Mark Yusko — chief of Morgan Creek Capital, an investment management firm — noted that Bitcoin’s fundamental trend is decisively positive. He cited three factors to back his cheery sentiment:
- The impending 2020 block reward halving, which will cut the inflation rate of Bitcoin in half.
- The growing levels of cryptocurrency use and adoption, evidenced by the surging number of active wallets on Bitcoin.
- The continuing devaluing of fiat currencies by central banks, which are leveraging low interest rates and large-scale asset purchasing to spur economic growth.
The post Bitcoin Suffers From Weekend Volatility Again: How Are Analysts Responding? appeared first on Blockonomi.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nick Chong, @Khareem Sudlow
