Bitcoin rollercoaster on a new down slope – Is this one the “Big Move”?


Bitcoin and its latest travails kept a bleary-eyed crew of analysts and traders awake through the night, as a sudden blast of cold wintry air from unknown parts knocked the token for a loop. As some astute observers remarked, the market share leader in Crypto-Land fell off a cliff, shedding $550 in minutes. The shockwave also pulled down altcoins, which had been celebrating a slight recovery that had been anticipated for months.

The strangeness of the move was that no one proffered any guesses at what the causes might have been for an abrupt fall from support of $10,200, but here we are again in the mid-$9,000s with everyone worrying that this might be the “Big Move” that analysts have been predicting for weeks on end, as Bitcoin refused to breakout to higher ground. What we have now is one huge red candlestick, which might haunt us for days ahead:

The candlestick could have been much larger, if the “wick” had been the closing price on this 4-hour representation of the bad news, courtesy of TradingView. BTC did dip down to $9,600, but soon found support and recovered to about $9,800. It now hovers about $10,040 and shows signs of returning to previous support levels.

Why such a wild fluctuation in BTC price behavior? Perhaps, the preponderance of predictions of a sudden move, whether up or down, actually put the bullets in the revolver. The gradually slopping curve seen above and on longer timeframes was surely evidence that bulls were losing control. It seemed only a matter time before voracious bears would come calling and exact their pound of flesh. In today’s Bitcoin narrative, anything repeated often enough eventually takes a toll on market sentiment. A test arises, awakening the bears, but also poking the bulls where it hurts. The result, both in the past and now, has been whipsaw price action, which terrified the Bitcoin faithful.

Skew Markets, a crypto analytics firm, noted that investors long on Bitcoin were the certainly the most terrified, dumping an estimated $155 million of long positions in minutes, which could have fueled the BTC drama. In the past week, tight Bollinger Bands had signaled that a major move was imminent. The “guess” is that traders were split on the direction. For those that went long, they must have thought they had guessed wrong and jumped to their respective trading screens to sell in mass.

Analysts on the positive side of the street are not too worried by this move. Tests seem to be coming every 2-3 days, a way of seeing if anyone is awake. One analyst actually stated that a price decline, when accompanied by declining volumes, is a “bullish” signal from the market. Other analysts like Josh Rager do not see any problems until the $9,400 level is penetrated. Such a fall would usher in lower support levels and offer institutional players another shot at bargain price levels. Price manipulation is not unheard of in our highly unregulated Bitcoin market to date.

Let us not forget that the Bakkt exchange will launch on Monday. It, too, may take a gradual approach before going full steam ahead, much in the same fashion as had Fidelity Investments and its institutional launch. No one wants anything like a “flash crash” to dampen the spirits of its customer base, at least not early on in the process. A major launch like the Bakkt exchange can also cause ripples in the market before, during, and after the event. This week’s turbulence could be “opening angst”, so to speak, similar to a market run up to a crucial Non-Farm Payroll release.

The time for cautious trading is now. Expect market turbulence for a few weeks to come.

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