Bitcoin Bears try again to take control of action, as analysts debate causes


Bitcoin prices were beaten down not once but twice over a period of six hours last evening. The initial hit drove the value down from roughly $8,500 to $7,700 and change. It slowly recovered, peaking above $8,000 for a bit, only to test support once more. Since that time, it has hovered about $7,800. It did test $7,600 at one point, but bounced back quickly. Bears are trying to take control, but they have been repulsed three times. The strange thing, however, is that there has not been a news item that would cause a rush for the exits. As a result, analysts are grasping for clues and smoking guns.

The debate today is ongoing. Here are a few of the more predominant theories:

  • Whales Splashing About: We spoke to this theory yesterday. It was the cause that everyone leaped upon, as soon as the first dip appeared. One Whale made two transfers totaling 25K BTC to Coinbase, and then supposedly took his profits. The logic held for a while until other analysts checked the volume ledgers at Coinbase, which were only a few thousand Bitcoins, nothing near enough to represent a large sell order that could rock the market. One Whale’s attempt at price manipulation did not seem to hold water;
  • Deliberate Price Manipulation: Another Whale theory claimed that a single investor sold a major amount to drive the price down, then gobbled up cheap tokens at will. There were number of angry traders on social media beating the band with this idea. Joshua Frank, co-founder of The TIE, a cryptocurrency trading data and analytics provider, however, disagreed: “No individual exchange has the liquidity to handle anywhere near $200M USD in a dump. There is no way that this person sold everything that was transferred and bought it back”. A major Buy order would have driven the price back up, big time;
  • The Whale Got Cold Feet or Fins: Another derivation on the Whale theory suggests that a Whale did attempt to take profits, but recanted when he saw how the market reacted. Per Frank again: “It is possible that the individual thought that they would be able to dump their holdings on Coinbase. As they started selling off they realized how significantly they were affecting price and stopped;”
  • Take Profit Orders above $9,000: When analysts have forecasted that $10,000 and $12,000 were near-term targets for 2019, the majority of them also stressed that the low $9,000’s were going to be formidable resistance, an over-used phrase, to be sure. The thing was that Whales and nearly everyone else had positioned Take-Profit orders at $9,400 and below to cash in on gains. John Todaro, director of digital currency research for TradeBlock, explained: “You had bitcoin fall after just touching $9,000 per coin last week as traders took profits following what has been a very strong run–bulls seem to be looking to take a breather here;”
  • Bulls are Just Plain Exhausted: Researchers have noticed that Google Trend global searches for “Buy BTC” have taken a nosedive after he first of the month. Rises in interest have correlated well with recent price jumps. The Tie group also tracks positive and negative comments on Twitter, a type of sentiment index, if you will. It, too, has dropped of late, indicating a bearish trend is forming.

The SEC had also taken legal action against social media startup Kik, alleging that token sales did not comply with security laws. This type of action against an ICO startup is not that unusual these days and occurred early in the news cycle, much too early to cause such a delayed reaction.

When analysts cannot find a direct fundamental driver to blame, then the only thing left to do is to accept that “technical’ reasons prevailed. For weeks, the crypto community has been predicting that a major correction in the 30%+ range was long overdue. These prognostications were solely based on technical analysis, specifically citing various Fibonacci levels that were on the radar screen.

Charles Hayter, cofounder and CEO of digital currency data platform CryptoCompare, said: “The market has moved a lot in recent weeks so this is just a retracement.” The latter term means a pullback to a known Fibonacci level. Tim Enneking, managing director of Digital Capital Management, echoed the same sentiment: “The entire crypto trading community has been waiting for a pullback for some time now. Most people, including us, are looking for a 25-30% pullback from the high (of about $9,100). So far, we’ve gotten about half that.”

If you do the math, a 30% “retracement” from $9,100 would land upon $6,400, a level of support that Mati Greenspan, eToro senior market analyst, has espoused for months. He also does not buy into the “Whale” theories: “Price discovery is decentralized. Whale moves only influence the markets for a limited period of time. It’s normal to see a pullback. We can’t be surprised by a 30% correction after a 107% increase since April.”


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