The bitcoin price chart slammed down like a Stark on a Bolton, today, but readers are being encouraged to take heart from the healthy correction and well-deserved profit-taking. This is the natural behavior of markets, and after a much need pullback greater things lie ahead for the bitcoin price chart and for Bitcoin at large.
Bitcoin Price Analysis
Time of analysis: 15h00 UTC
Bitstamp 1-Hour Candle Chart
From the analysis pages of xbt.social, earlier today:
Price has dropped to the lower end of the support zone (orange) discussed in yesterday’s analysis, and it looks like the sell-off has not yet hit bottom.
If decline continues, then the next lower level of support is at $575 where price consolidated in early June. This also happens to be the current level of the 4hr 200MA (not shown).
Many people are asking the question “What caused this crash?” Some allege that technical problems at Bitfinex may be the cause, others point to the DAO hack, and some say its the unstable full moon. When markets move strongly – especially adversely – it often prompts participants to look for external explanations.
From a socionomic point of view, markets are driven by the psychology of the entire market collective, and this super organism buys and sells price up and down, in almost flagrant disregard of reason, conventional economics or supply and demand. In this sense, the market expresses its hopes and fears (i.e. its mood) in the price chart, rather than making rational decisions based on facts and fundamentals.
Bitcoin remains in a long-term uptrend and this sell-off reveals some nervous apprehension about price approaching $1000. Many buy-and-holders have seen their bitcoin holdings go back into profit for the first time in more than 2 years. The fear of enduring loss, again, has prompted profit taking, but the steady uptrend of 2016 means that this is an expected pullback and that we can look forward to additional advance, to greater heights, in the coming months.
Despite today’s strong sell-off, the sense that the larger advancing wave will resume remains intact. The rounded wave top reveals that the past month’s advance is only a foothill of a super rally. The present correction may last several weeks and draw deep, but the advice remains the same: trade cautiously and with much attention to risk – preserve your trading funds for the second half of the year.
Bitfinex Depth Chart and Buy/Sell Volume
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Bitcoin price charts from TradingView.
Image from Shutterstock.