Sooner or later, Bitcoin and gravity were going to be good friends again. After gradually recovering from a bout in the lowlands below $10,000 nearly two weeks back, buyers for the world’s favorite cryptocurrency began to run out of steam. After groping its way back above $13,000, the weight of the bears on its back suddenly took over, as a downtrend began to develop. After a close at $9,413, the 24-hour loss stood at roughly 13.3%, the second largest recorded loss over a single day’s trading, just under 13.7% on June 27th.
The following chart set, courtesy of Coindesk, tells the story:
From purely a technical perspective, the obvious “Double-Top” formation, when combined with the signals provided by both indicators to the right, suggested strongly that bulls were overly tired from the backbreaking work of the previous week or so. It was time to take a major breather and hand the baton to the bears. The RSI may be close to oversold territory, but the close below the previous low of $9,614 is not an encouraging sign that the previous upward thrust would resume any time soon.
From a fundamental perspective, Bitcoin has been besieged in past weeks by a flurry of attacks from political types and members of the regulatory establishment. It has appeared that every figurehead seeking the attention of “free” press coverage has jumped upon the crypto skeptics’ bandwagon, decrying all things crypto with every negative argument ever created. The public scorn, if you will, is heavily directed at Facebook and its Project Libra, an easy target these days. Bitcoin and other cyrptos may benefit in the long term, but for now, crypto negativity is dripping from most headlines.
Facebook publicity has been a double-edged sword, of sorts, creating tons of awareness for Bitcoin and the crypto community a month ago, but suddenly, it has taken a 180-degree turn, giving every politician a soapbox upon which to shout derisive comments at its billionaire creator, Mark Zuckerberg. One headline screamed:
Tough Crowd: Senators Compare Facebook’s Libra To Arsonists And Bond Villains”, and as the author added: “And that was among the nicer things they had to say.
The reason for the Libra attention is that hearings are taking place on Capitol Hill on the topic, back-to-back sessions, the Senate yesterday, today the House. The mood of the Senate was caustic:
From Senators questioning the age-old privacy problem of Facebook to calling Libra outright delusional, they reigned down on David Marcus, lead of the Libra Project and VP of Messaging Products at Facebook. The aging US lawmakers were concerned about Libra’s plan to overhaul national currencies and manipulate monetary policies, and with the “massive reach” of Facebook, that prospect looks even more menacing.
To David Marcus’s credit, he took the blows admirably, repeating and stressing that Libra had every intention of seeking “proper approval and registrations with the relevant authorities, including the United States Financial Crimes Enforcement Network”. As the House hearing (most attendees describe these “hearings” as “listenings”) commences, committee chair Representative Maxine Waters has already launched into a diatribe over Facebook’s previous bad behavior, regarding privacy and how it “allowed malicious Russian state actors to purchase and target ads, which purportedly influenced the 2016 U.S. presidential elections”.
While the short-term impact of this flurry of negativism is a sharp loss in market valuations, analysts remain mixed on what could happen after this “pillaring in the public square” is concluded. Mati Greenspan, senior market analyst at eToro, has counseled for over a month that Bitcoin had appreciated much too quickly and had never sufficiently tested the psychological barrier of $10,000 enough to convert it to strong support. His words are echoing in the room at present.
Other analysts are mixed. First, a few negative comments:
- Peter Brandt, veteran trader and crypto analyst: “While the parabola in BTC was subject to different renderings, the parabola in the total market cap chart was loud and clear. Total cap should correct 80%. Most of the damage of decline will occur to altcoins.”
- Josh Rager, investor and regular commentator: “Market structure is broken and lower-lows have been set on higher time frames. There will be smaller bounces in between, but it looks like the trend has changed folks – for the short term. The previous bull market pullback lasted up to five weeks before positive sentiment took over.”
The phrase “short term” has appeared in abundance in most commentaries. Analysts believe the current storm will pass and that better days still lie ahead. In a report by “The TIE”, it states that:
Despite the present bearish scenario, Bitcoin’s long-term traits remain extremely positive. The report also suggested that Bitcoin’s long-term sentiment, which had bottomed around the end of the crypto-winter in December 2018, has been on the rise since.
Analysts that have positive long-term sentiments for Bitcoin are currently focusing their gaze upon the 200-Day Moving Average, which they claim is displaying a projected bullish trend. Per Omkar Godbole at Coindesk:
The long-term outlook will remain bullish as long as BTC is holding above the 200-day moving average line.
How low could BTC go in the short-term? Per Godbole again:
So, the stage looks set for a drop to $9,097 (May 30 high). A violation there would expose the 100-day MA, currently at $8,122.
In summary, the best take on the current market scenario comes from this pundit’s remark:
If there’s anything the cryptocurrency market has taught us, it is this: Bitcoin almost never takes the predicted path.