The BTC bulls tried and they fell short of the mark over the last day or so. Having carried the crypto past the $11k mark and sort of mounting a move on $12k, they got overwhelmed by the bears, and we’re now once again combing the sub-10k domain instead. What does technical analysis say? What do the fundamentals preach? Let’s take a look and find out…
The resistance level that spelled doom for the latest BTC mini-rally, was $11.6k. What followed was a classic retreat, which began tentatively, as some of the bulls fought back here and there for a while, but at the time of writing, this relatively orderly retreat had turned into a headlong rout, with the price dropping around $800 in a matter of minutes. So what exactly happened in technical terms?
The descending trendline drawn from the December 17 high to the January 6 high, was considered the target to beat by most analysts, and indeed, the price of BTC closed above it on March 4, indicating a possible long term trend reversal, from bearish to bullish. The follow through was nothing short of disgraceful though. The price was quick to retreat below the trendline, as all sorts of chart- and candlestick patterns emerged, almost violently denying the previously dangled trend-reversal.
On the one-hour chart, the 50MA and the 100MA executed a bearish cross-over as the 200MA flat-lined. All this pointed to a firm return of the bearish bias, though back then, the extent of the rout was quite impossible to gauge.
What’s still more worrying for BTC hodlers is the fact that all the above transpired against the backdrop of high trading volumes.
The sudden recent drop is clearly visible on the chart above, and the Stochastic oscillator also makes its cause rather clear: the cryptocurrency is massively oversold, with the lines of the oscillator crossing several times in this critical zone – to no avail.
What do the fundamentals say though?
Over the past few months, the bankruptcy trustee handling the now defunct Japanese exchange Mt. Gox, apparently flooded the market with around $400 million in cryptos. A report from the said trustee surfaced on March 7, according to which, some 35,841 BTC were successfully sold, together with an almost equally large batch of Bitcoin Cash (34,008 BCH).
Back when Mt. Gox collapsed, sending the crypto market into a tailspin which would last for quite some time, those tasked with mopping up the mess, managed to recover some 200,000 BTC. What this means is that there’s more where the liquidator’s 35k came from, and indeed, further BTC sales may be executed, their impact on the market difficult to predict at this point.
Apparently, some 18k BTC were moved on February 5, a day which saw a massive drop in the price of the crypto. With more than 166k BTC still stacked up in the wallets of the trustee, further threats to BTC price are indeed still in store from this source. The ghost of Mt. Gox is officially back to haunt the BTC markets.
In other news: a US District Judge has backed the CFTC’s definition of cryptocurrencies as commodities. The ruling was handed down in a fraud case where the contention was centered on the CFTC’s authority concerning the regulation of cryptocurrencies. By being defined as commodities, cryptos legally fall under the CFTC’s jurisdiction, meaning that the body can now act upon fraud that is not perpetrated through the sale of futures contracts or derivatives.
The CFTC has been considering cryptos commodities since 2015, and it has targeted several cypto-based financial scams.