The bitcoin price has dropped below $8,000 once again and traders are preparing for a larger pullback in the cryptocurrency market.
On October 11, when the bitcoin price spiked to $8,800, the probability of a short term trend reversal to the upside initially increased.
However, following a hard rejection down to $8,200 within a span of hours, the sell-pressure on bitcoin built up, eventually leading to a drop to the $7,000 region.
Traders and technical analysts are considering the $6,000 region to be the near term bottom for bitcoin given historical activity in that area.
Angelo, a cryptocurrency trader known to trade with large size, said that he is “patiently waiting” for the bitcoin price to test levels at around $6,000 to add to his long term holdings, anticipating the short term bear trend of the asset to continue.
As traders explore potential areas of support, the $6,100 to $6,500 range is widely being acknowledged as the next strong support level from which bitcoin could recover from.
“Large volume profile near 2018 support meme 6.1k – 6.45k to go through first. I’d expect a substantial bounce there,” said Nick Cote, CIO at Redacted Capital.
A bigger correction for bitcoin is being predicted after its re-entry of the $7,000 region primarily due to the decline in the volume of the bitcoin exchange market since July.
In July and August, the daily volume of bitcoin on BitMEX, the world’s largest margin trading platform for cryptocurrency investors, was hovering at above $10 billion.
On October 12, the daily volume of bitcoin BitMEX dropped below $900 million for the first time in seven months, since late March.
The steep decline in the volume of BTC reflects the lack of interest in BTC in the current price range, possibly indicating that there is not enough buying demand in this area to trigger a bitcoin recovery.
In early October, a technical analyst who operates under the moniker “Dave the Wave” said that based on various indicators including lowering volume and the 3-year moving average indicates a potential bottom target for BTC at $6,700.
The analyst said:
“A comparison of the corrections with the 3 year MA is interesting – price first pushes through, breaks above, then comes back to it for support. This lines up nicely with other factors suggesting a 6.7K odd target,”
According to Scott Melker, trader at Texas West Capital, while the short term trend of bitcoin is bearish, the long term trend of the asset still remains optimistic.
“I am not feeling particularly bearish long term. Even a monthly close below $7777 is likely a temporary stop on the way to higher highs long term, in my opinion. On a macro level, I remain extremely bullish on BTC. Sometimes you go down to go up.”
In the medium to long term, especially heading into 2020, key fundamental factors such as the block reward halving of BTC are anticipated to push the price of the asset upwards.
The narrative of the block reward halving acting like a big catalyst for a bitcoin price upsurge could have been overplayed far too early, given that the halving is expected to occur in mid-2020.
Other factors that have been hyped throughout early to mid-2019 including ETF and Bakkt have had little to no effect on the bitcoin price, adding to the exhaustion of investors.
Click here for a real-time bitcoin price chart.
This article was edited by Sam Bourgi.
Last modified: October 17, 2019 08:14 UTC