Having found a floor on Sunday, at the $7,335 mark, Bitcoin began mounting yet another one of its mini rebound-rallies, managing to climb all the way to $9,127 earlier today, before it apparently ran out of steam yet again, succumbing to the overall bearish trend that’s defined its existence over the last couple of months. Is it going to drop towards new lows again, or is it going to consolidate around $10,000?
Currently trading around $9,027, Bitcoin has now officially failed to break through the glass ceiling drawn up by downward sloping trend line linking the December 17 and January 6 highs. This latest withdrawal from this seemingly unconquerable trend-defining limit, was apparently foretold by an ominous bearish RSI divergence which popped up on the hourly charts. Say what you will about the senselessness of technical analysis regarding the price-evolution of BTC-like assets, but this time around, the indicators were indeed spot-on.
Apparently, at times of sustained sideway price-evolution, technical indicators gain additional value and credibility.
With that in mind, what’s awaiting us is the rather scary-looking intersection of the 50-day MA with the 20-day MA, which has the former cutting across the latter from above. In order to clear such a hurdle, the bulls would need a sustained push above at least $9,500, a push which – according to current technical analysis – is unlikely. If it happened though, the resulting momentum would probably take the price to around $11,700.
While the above said MA “Death Cross” is not exactly a solid indicator in this instance (given the mixed signals the RSI is producing and the fact that the selloff has presumably blown most of its own steam already), it is still well within reason to expect it to trigger yet another selloff. What that would translate to is a possible revisiting of the February low, which was around the $6,000 mark.
The bottom line in this regard is that consolidation in the slightly-above-$9,000 range will likely end up triggering such a selloff too.
As the chart above makes it clear, the situation is indeed quite volatile. The Stochastic Oscillator is clearly in overbought territory and its lines have indeed crossed as well. The first such alarm has been shrugged off, but we’re clearly back in a rather similar position now, so the danger of a selloff is indeed heightened.
As far as Buy/Sell bias is concerned, the oscillators are neutral. Only the MACD Level says Sell, while the Momentum points to Buy. The Moving Averages on the other hand, point to a Strong Sell, with 11 of them in the red, and only 3 in the green.
Enough of the technical artifices though. What do the fundamentals say?
News emanating out of Asia, indeed one of crypto’s strongest (and lately: hardest hit) regions, are mostly positive, despite the heavy regulatory moves undertaken by various governments.
At the Token 2049 Conference in Hong Kong, the mood was certainly upbeat, to say the least. Crypto activity -especially of the underground type – has intensified tenfold according to some sources, since the government moved to ban ICOs and trading at exchanges. While this hardly qualifies as good news, it has laid bare the inability of the authorities to effectively rein in the industry. The moves meant to close down potential avenues for money laundering have resulted in opening up 10 times as many underground ones.
With all that, the general conclusion was that China’s crypto scene remained in good health.
Japan’s approach to the issue was touted as the model worthy of following: instead of banning ICO’s, the country’s financial watchdog, the FSA, has embraced the movement, nudging it all onto a legal path by offering exchanges and token issuers official licenses.