Where is the 30%+ correction in Bitcoin prices? It was certainly not present during weekend trading, as the world’s favorite cryptocurrency bolted past $9,000, climbed to $9,388, pulled back, only to repeat its magical mystery tour once more. The ensuing attack on what many analysts have claimed to be an inordinate concentration of profit taking sell orders hit above the $9,300 level, only to pull back again. At this writing, Bitcoin charged again and now sits at $9,153, in firm command of a new upward trend.
Depending upon your exchange of choice, the exact tracking may have varied a bit, but the fact is that Bitcoin had no intention of going south for the summer months, as the analyst community had foretold, at least not during this weekend. It BTC is truly busting through a barrier of sell orders, one at a time, then this accumulation phase could be followed by another burst of momentum until the next obstacle, perhaps $10,000, is breached. Key Fibonacci levels rest at both $9,440 and $11,400, respectively.
At times like these, one tends to look longer term in order to know where previous resistance and support have been established in the past. The weekly chart below highlights these potential benchmarks:
These Fibonacci benchmarks are the major ones on the trail to absolute recovery just beneath $20,000, but for the moment, Bitcoin is actually half way there. Once past $10,000, shorter timeframes will reveal the more subtle obstacles in the road, presuming that happens soon enough. The sudden burst of energy, however, came as a bit of a surprise, although BTC had been stuck in a tight range since the 4th of this month. The $9,388 figure is a high watermark for 2019 and actually a 13-month high, as well.
The “Doji” candlestick two weeks back had caused some concern, and when it was followed by a red reversal, the potential for a correction was back on the radar screen. This weekend’s run, however, has put that kind of thinking to bed for the moment. Other technical indicators related to key moving average crosses and volume throughput remain bearish to a degree, the reason for continued cautious optimism in the ranks.
What is going on behind the scenes to cause such a surprising move in the market? The first place to look is to check on the trend for Bitcoin dominance. A few weeks back, it crested above 60%, but it pulled back, as its altcoin brethren had a rally of their own, playing catch up, as it were. This kind of ebb and flow often repeats as “risk-on” and “risk-off” sentiments ripple through the market. Bitcoin dominance is on the rise again, passing 57% on a repeat uptrend.
What could be causing this shift? Binance, the world’s largest crypto exchange by volume, recently announced that it would discontinue providing trading services to U.S.-based investors. Binance is a “crypto-to-crypto” exchange, but it has plans to establish separate “fiat-to-crypto” exchanges in specific countries, ten to be exact. The U.S. version will be regulated, and exiting investors will need to wait until mid-September to resume activity in their accounts.
Binance clients apparently are not waiting. Binance’s proprietary coin, “BNB”, has depreciated 22% in the past few weeks, a sign that transfers are taking place. Traders with VPN access can trade, since their national origin is not directly detectable. The thinking is that Chinese and U.S. clients are moving to Bitcoin, whether within the Binance infrastructure or without.
Josh Rager, an independent market analyst on Twitter, explained: “Pay attention as increased Bitcoin dominance, specifically over 60%, is bullish for BTC holders but isn’t good for most altcoins. With U.S. Binance ban & other exchange delistings, people could be moving into BTC & major market cap coins.”
Chris Burniske, a partner at New York-based venture capitalist firm, noted the correlation of the Yuan with Chinese moves in the crypto market: “The US’s trade war with China, China’s tightening of capital controls to limit funds fleeing the country, and a weakening yuan all added fuel to $BTC’s fire. Interestingly then, we have bitcoin satiating appetite for risk in the West and much of the world, while simultaneously serving as a risk-off hedge in China.”
Lastly, there has been a great deal of hype recently regarding Facebook’s crypto entry in the market. Its “Project Libra” is to be a cross-border payment enabler, using a stablecoin and its own blockchain to challenge both Bitcoin and other tokens with similar market ambitions. The “hype” may have helped BTC in the short-term, but the long-term view is that is could be transformative in the industry, and according to Peter Schiff, a prominent U.S. stockbroker, he believes it will “bad news for bitcoin”. Time will tell.