Sunday trade brought the Bitcoin price below $300 across the BTC/USD exchanges. Price dropped to $275 at Bitstamp before climbing back above $300. Additional downside may still be possible, but there is strong evidence that the bottom may have been struck. Confirmation of a bottom will be covered in CCN's daily analysis articles during the coming days. As always, stay tuned to CCN for the latest Bitcoin price analysis.
Bitcoin Price Decline Overview
It is ten months to the day since China's PBoC announced restrictions on the exchange of Bitcoin. It is a popularly held belief that this event had preempted the Bitcoin price decline. However, few people are aware that the all-time high occurred five days earlier on 30 November. The Bitcoin price had already been declining for five days when the news came out of China.
Also read: Why the Bitcoin Crash Below $500?
We are now at a time when the price chart's internal structure is busy concluding the entire decline since November last year. An uncomplicated wave count of the larger wave degrees looks like this:
The current wave, wave E of wave IV, is counted as a (flat a-b-c) correction. Wave E has the same function as wave C, which, in this context, is to progress the downward corrective trend. They share similar wave patterns in their respective c subwaves, although subwave c of wave E is more complex and has, therefore, taken longer to cover the same vertical distance.
A benefit of wave E being complex is that it is well articulated despite having wasted a lot of time hopping trendlines. Wave E is counted with the interpretation that it's 5th subwave had extended. Comparing wave C and wave E it can be seen how they have similar subwaves, despite their different wave counts. Had subwave b of wave C been less pronounced, it might have been possible to count wave C in a similar manner to wave E, but the deciding factor is their overall structures. Wave C is best-described as a zig-zag and wave E as a flat correction.
Regardless of subwave counts, the larger correction fits both the look and the rules of a corrective triangle. Wave E has struck the lower trendline in the Bitstamp; BitFinex and BTC-China charts and the wave count above argues that the decline had completed at $275 (Bitstamp). However, BTC-e has not found the lower trendline at it's low of $287.00 and may still go after it - thereby implying that all the exchanges have additional lows to come. Wave E may print "throw-over" past the lower triangle barrier - something that occurs frequently at the end of a triangle correction.
Remaining Bitcoin Price Crash Targets
The Bitstamp chart, below, shows that $260 and $200 still present decline targets, as well as a long-term ascending channel trendline presently cutting through $170. However, with the way price had settled above $300 earlier today only to be pushed $25 lower (within minutes) due to the onset of heavy selling... any arbitrary low is possible with these centralized exchanges. Hopefully, the last low ($275 on Bitstamp) was low enough for the majority of market participants.
Notice, on the chart, the various indicator and signals of imminent reversal to an uptrend:
- Lower price lows on declining volume
- Divergence of MACD and RSI from successive price lows
- Price position on the ascending yellow channel trendline that has acted as support and resistance throughout the Bitcoin price history
Confirmation of Advance
The relentless decline of the past few weeks means that price must now advance for some time - if anything to reset indicators and bring some relief to the market. If the Bitcoin price is indeed at the start of advance then, the first objective of price will be to establish trade above $300. The next step is to tag the 20-period moving average on the 4-hour chart (currently at $347) and then to establish trade above that and approach the 200-period moving average (currently at $430 on the 4-hour Bitstamp chart).
Once above $400 - and maintaining advance above the 200MA - only then will we have confirmation that the advance is underway. That is unlikely to happen before the full moon on 8 October. In the meantime, catch possible new lows with exchange buy orders at $260, $200 and the lower channel trendline.
The probability of advance increases if price can hold above the $300 psychological level. However, don't be too aggressive buying into the market as price initially climbs atop $300 and begins rising - it will retrace soon enough and the manner in which it does that will tell us more about its intentions, as well as allow us to determine targets to the upside.
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Readers can follow Bitcoin price analysis updates each weekday on CCN. In-depth analysis articles are published every Sunday.
The writer is fully invested in Bitcoin via BTC-e and Bitfinex. Trade and Investment is risky but not as risky as some other things out there. Take care only to take action in the market when you are 100% sure of the outcome. CCN accepts no liability whatsoever for losses incurred as a result of anything written in this Bitcoin price analysis report.
Bitcoin price charts from TradingView.
Images from Shutterstock.