Bitcoin traders were badly whipsawed today and yesterday as the cryptocurrency rose above $9,100 only to dump back down to $8,600. The price action gives spot buyers or HODLers the opportunity to add to their long positions. A widely-followed trader shared a chart that explains…
Bitcoin surprised almost everyone on Sunday. The cryptocurrency suddenly spiked by 4 percent in less than ten minutes.The dominant cryptocurrency was trading at $8,787.11 around 11:15 am EST. By 11:21 am, bitcoin was valued at $9,123.34.
The quick jump in price contributed to short liquidations of about $58.04 million going into today’s trading.
The cryptocurrency managed to retain most of its gains at the start of today’s trading. However, the bears were able to repel the advance. When support of $9,000 broke, bitcoin plunged to today’s low of $8,571.50. The selloff triggered long liquidations to the tune of $31 million.
All in all, traders suffered a total loss of $89.06 million as bitcoin traded from $8,600 to $9,100 and back to $8,600. This all happened in less than 48 hours. Welcome back volatility.
If you’re not trading on leverage, then you shouldn’t lose sleep over these wild swings. Bitcoin’s volatility is welcomed by short-term traders. Those who buy on the spot markets can take this chance to add to their long positions.
That’s the mindset of Todd Butterfield, owner of the Wyckoff Stock Market Institute. The analyst told CCN,
I was hoping for $8,600 to add to our long positions for a strong year-end rally.
Todd Butterfield is not alone to have this view. Scott Melker, AKA the Wolf of All Streets, also sees the possibility of a bounce. According to the trader, bears are euphoric due to the recent dump. This might give bitcoin the fuel for a powerful short squeeze.
I’ve been looking at charts and predictions on bitcoin by analysts with massive followings on Twitter. One that caught my attention is the chart by CryptoRand.
The widely-followed trader sees a massive bitcoin rally. CryptoRand illustrates how the number one cryptocurrency broke out from a large falling wedge. The dump today appears to be a retest of the former resistance.
For those who are not familiar with technical analysis, a falling wedge forms in an uptrending market. It indicates a period of profit-taking. Once selling is over, the asset usually breaks out with high volume.
The high volume breakout happened to bitcoin on October 26th. On that day, the cryptocurrency breached the diagonal resistance of the wedge. It also printed volume that’s over 242 percent higher than its daily average.
Also, The falling wedge breakout plays well with Todd Butterfield’s script of a strong year-end surge. In addition, CryptoRand’s analysis explains the pump and dump that happened yesterday and today.
If the trader’s reads are correct, it seems that bitcoin is building a base in preparation for a strong rally. This is something that both bulls and bears would not expect. Bulls who are waiting for $8,400 or lower would get left behind. On the other hand, confident bears would provide the funding for the spike.
It appears that the last few weeks of the year might be exciting for bitcoin.
Disclaimer: The above should not be considered trading advice from CCN. The writer owns bitcoin and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
This article was edited by Samburaj Das.
Last modified: November 11, 2019 2:20 PM UTC