Following a 25% drop in a single week, Bitcoin appears to have finally found a bottom below $5,000. Experts and analyst say that the current downward spiral trend is Bitcoin overreacting to the extent that it has reached high oversold levels. In the last couple of months, Bitcoin value showed the industry and the world at large that it can behave as a mature asset. The digital asset’s value remained stable between the highs of $6,800 and the range support at $6,200.
Doom Sayers and critics of Bitcoin are extremely excited with the recent trend and envision Bitcoin at zero. Such like characters include Nouriel Roubini, also known as “Dr. Doom,” who said last Wednesday that Bitcoin and cryptocurrency assets are the root of all evil and that they all belong at zero. While no one in the cryptocurrency market gives attention to what “Dr. Doom” says anymore, his comments do scare away new users and customers who would have liked to be involve with virtual currencies.
Technical levels for Bitcoin price
Stochastic indicators are rarely used in cryptocurrency technical analysis. However, the indicators are a powerful tool that helps investors and traders to spot a change in momentum before the real price action takes place. In other words, the indicators can be used to determine the metrics of whether a trading asset has been either oversold or overbought.
The daily chart for Bitcoin against the USD shows that the stochastic has explored the levels below 20 for the first time since the beginning of September when Bitcoin plunged from trading roughly at $7,400 to the levels around $6,200. However, while in September the indicator dipped further below 10, this current drop has the stochastic at 11.83.
This levels say that the market has been oversold. In other technical terms, it means that Bitcoin price is trading way below its market value. The largest asset by market capitalization is also dragging the entire market with it to the bottom. Other assets like Ethereum have been badly hit by the selling pressure. Ethereum dived below $150, forming new 2018 lows. Ripple’s XRP has been among the best performers in the market being able to weather down the declines gracefully. As we speak, XRP/USD is hammering on $0.5 hurdle after a 3.41% growth on the day.
As mentioned before, Bitcoin price is overreacting to the civil in the Bitcoin (BCH) community following the hard fork on November 15. The hard fork saw the 4th largest digital asset in the market split into two different chains representing a couple of tokens, Bitcoin ABC (BCH ABC) and Bitcoin SV (BCH SV). There is a hashing war ongoing in the community with miners suffering in millions of lost revenues. As the situation gets better in this community, the crypto market can then find bearish and start an upward reversal.
Meanwhile the declines in Bitcoin price in the past one week saw Bitcoin drop below a three months’ base support at $6,200. Traders did not anticipate this drop hence the overreaction below $6,000 and the current drop below $5,000. Besides, the situation suggests that some investors are disposing of Bitcoin in order to protect what is left of their funds. eToro’s market analyst Matt Greenspan says:
“Short-term price fluctuations are rarely correlated to the stock market”, in continuation “But the macroeconomic trends do tend to line up.”
This does not also suggest that Bitcoin bulls are not present neither have they given up. Other technical indicators like the moving averages show that a reversal is still a difficult task. However, Bitcoin is likely to revamp the trend as investors “buy the dip.” Bitcoin can be bought at over $1,000 discount and a recovery is expected as the market settles and the reaction to Bitcoin Cash saga stops. Bitcoin price is trading at $4,849 and is down 12.49% according to the livestream data on Blockmodo.