Bitcoin in a Serious Correction
Traders might have gotten used to Bitcoin’s “Gloomy-Fridays” lately, as the back part of the last session before the weekend saw huge spikes lower for the currency. What’s new is that the decline started yesterday with an almost 20% intraday slump. While that initial dip was bought furiously during the Asian session, today the downward pressure intensified, resulting in a waterfall decline in BTC during the US session. The other major coins are also being dragged lower by the storm, with the exception of the usual suspect Ripple.
What’s behind the crash? I am sure there will be a reason pointed out by the talking heads, the reality is that a steep decline was baked in the cake. Amazingly enough, Bitcoin more than doubled since hitting a new all-time high a month ago, and although the long-term trend is far from being a question, especially given the roaring fundamental background, but there is undoubtedly more room for correction.
Jim and I are both watching the $1600 support (for different reasons), as the main correction target, with the $1875 level also looking strong, should the $2000 support fall. The short-term trendline is right at $2000 as well, with the less crazy long-term trendline being found near $1800.
Those levels could all serve as the next major bottom, but even the re-test of the previous long-term high at $1300 is possible after such a stellar run. These boom-bust cycles were part of Bitcoin’s past, although one could argue that the environment completely changed recently. We will see how weekend trading will shape up, and how much Asian demand will help in the recovery. For now, patience is the name of the game, as the recent heated sentiment should turn bearish for another key turning point to form.
Be safe out there!