For most of 2019, bitcoin and the wider cryptocurrency market rode a bullish wave, as a reduction in short-selling allowed prices to creep higher. However, on Thursday the bitcoin price crashed below the $4,000 mark, and now one prominent trader warns that it is dangerously close to approaching a level where even bulls need to “GTFO.”
That trader is Mark Dow, a former IMF economist who famously shorted the bitcoin price from near its all-time high in 2017 to below $3,750.
Commenting on Thursday’s two-step drop from above $4,000 to below $3,600, Dow said that the flagship cryptocurrency’s technical indicators were not pretty.
“Nasty little air pocket in #bitcoin. If you are a crypto bull, you no NOT want to see this red line broken (~3550). Would be a very bearish sign,” he tweeted on Thursday. “Man, #bitcoin, technically, is really on the ropes here.”
Dow’s perspective on bitcoin is interesting, considering that he is relatively agnostic on its long-term fundamental value as an asset and admittedly knows very “little” about it beyond the fact that it is “highly tradeable.”
As he tweeted earlier this month:
I’ve yet to hear a positive, credible use case for #bitcoin. Plus, I see a lot of delusional arguments & scammy promotion. However, truth is I know v little about it. What I do know is it has been highly tradeable based on patterns, and I suspect it will continue to be.
According to Dow, yesterday’s pullback brought bitcoin dangerously close to approaching a level at which even bullish traders should “GTFO.”
On Coinbase, for instance, the bitcoin price slipped as low as $3,560, just $10 above Dow’s escape hatch, though it quickly scrambled back above $3,600 to give traders a bit of breathing room. If that support line cannot hold, Dow warned that the market could see another sharp drop as it continues to frantically search for a bottom.
However, other technical analysts have taken a different reading from the charts.
Writing in daily market commentary made available to CCN, eToro Senior Market Analyst Mati Greenspan — an admitted cryptocurrency bull — said that the movement was “actually insignificant” since bitcoin stayed within the range at which it has been trading since mid-November.
“The total movement of 12% from peak to trough was actually insignificant. All we’re seeing is a movement from the top to the bottom of the range,” Greenspan wrote. “As we’ve been discussing since mid-November, the current range is from $3,000 to $5,000 (dotted blue lines). It seems now, that bitcoin has opened a new mini-range within that from [$3,550] to approximately $4,200 (yellow lines).”
Though the movements likely caught many investors off-guard, Greenspan alleged that one shouldn’t overstate their importance.
Movements within a range can sometimes be sudden like we saw yesterday, but unless there’s a breakout of the key levels there really isn’t much to write home about.
In any case, the bitcoin price recovered a small portion of its Thursday losses on Friday, climbing to an aggregated level of $3,701 as of the time of writing. The overall cryptocurrency market, meanwhile, carried a valuation of $123.6 billion.
Featured Image from Shutterstock. Price Charts from TradingView.