On the day where the UK supreme court ruled that Prime Minister Boris Johnson’s suspension of parliament was in fact illegal, it was Bitcoin which stole news headlines. Following the huge moves in Crude Oil last week, Bitcoins 20% drop in value, its biggest one day selloff since January 2018 continues the recent trends of high swinging trades. The drop that day in January saw BTCUSD go from $13,980 to $10,250. Yesterday we saw a high of $9,750, quickly retreat to a days low of $7,770.
So what’s happening? The move in Oil was clear. Threat of low supply, meant higher prices. News of potential oversupplying from the US swiftly brought prices back down. What about BTCUSD? Are further moves imminent? and are the reasons behind this move clear cut for all to see?
In answering those questions there are usually 2 perspectives to consider. The Fundamentals and Technicals. Fundamentally it has always been hard to read exactly what news truly impacts price movement in Bitcoin. With so much fake news surrounding crypto’s from ICO’s to retail adoption for everyday transactions we’ve heard it all, and investors have now muted most fundamental commentary due to a lot of it being unfounded. Remember claims of $100k Bitcoin in 2018? The markets do. So if reluctantly not fundamentals, where does one look?
With the technicals, in Bitcoin trading, and the wider crypto sphere, volumes seem to operate on herd mentality more than most markets. As traders and investors look to each other for guidance on future price actions.
BTCUSD – Weekly Chart – provided by Tradeview Markets
In following the herd, many would have seen that for the first time since late 2017, early 2018 BTCUSD has been trading around what looks like a resistance of $11,637. – Looking retrospectively to 2 years ago what followed that ceiling was of course the selloff leading to a floor $7,350. So with the benefit of hindsight, traders may have seen the recent bull run in May this year as merely false breakouts. Which then led to a sideways trending market, before history was ready to repeat itself, with yesterday’s drop.
Now that the drop has happened what next? Currently the volumes in the market going by a 14-day RSI says we could be at a floor, or point where the market is oversold. Although we may see $7,300 hit again this week as sellers panic and dump, the volumes suggest it could find ground at that point. The question then is, when finally firm in its position at support.