Bitcoin falls to $6,600, with analysts predicting further drops
Technical analysis spells trouble for Bitcoin, but anecdotal analysis sees a lot to like.
Bitcoin has spent last week heading downwards, shedding about a quarter of its price on the way down from $8,500 to $6,500.
Analysts remained hopeful that there would be a reversal on the cards as Bitcoin bounced off the $6,900 support level last Friday, and stayed above it throughout the weekend, but Monday brought a fresh plunge.
By failing to hold at the $6,900 mark, $2,500 is potentially a new bottom, according to an analyst for Cointelegraph who says the markets were flashing bearish indicators at the end of last week and needed a strong bounce to counter that narrative.
"Bitcoin has very little preventing it from heading down to the $2,500 - $3,500 range from a technical perspective," they write.
The needed price bounce did not eventuate. To the contrary, Bitcoin fell about 10%, which is a major sell-off even by the standards of the volatile cryptocurrency. Others, who correctly predicted today's fall to $6,600, say a bottom of $6,200 is looking more likely before prices will bounce back.
Of course, technical analysis alone can't forecast the impact of current affairs.
The current drop can be attributed largely to a renewed crackdown on cryptocurrency in China, and just at the end of last week, trading firm QCP was net bullish, saying it expected Chinese retail traders to buy the dip if Bitcoin falls under $7,000.
Now Bitcoin has taken the plunge, and the expected price rescue from Chinese retail traders appears not to have arrived. This may be a tangible example of how the regulatory dynamics in China are affecting the cryptocurrency markets, beyond simply "fudding" up the markets.
On the plus side
A lot of people are going to see Bitcoin at $6,600 as an absolute bargain. Plus, Bitcoin is just as prone to massive leaps as it is to sudden plunges. There's no TA in the world that will call for a sudden 20% rise, but it has been known to happen.
And if you're looking at it pessimistically, Bitcoin appears to be constantly finding lower highs. But a more optimistic look just sees constantly higher lows.
Bitcoin spent the first few months of 2019 languishing in the $3,500 doldrums. That was also the lowest point of 2018. The lowest point of 2017 also came at the turn of the year, when Bitcoin rang in the new year at less than $1,000. Going back a year further, Bitcoin's lowest point of 2016 was also in January.
If you ignore the anomalous December-January 2017-2018, Bitcoin has a relatively solid history of stepping up to progressively higher lows around the end of each year. In that light, it's not the most unreasonable thing in the world to expect Bitcoin to find a new higher low of $5,000 or $6,000 in December-January 2019-2020.
Overall, in a very non-technical way, it feels like there's still a lot to like as long as Bitcoin doesn't head to the sub-$3,000 range.
Disclosure: The author holds BNB and BTC at the time of writing.