On Sunday, Bitcoin, after a brief weekend rally, saw a strong reversal at $10,000, failing to hold above this key psychological and technical support level. And since then, bulls haven’t stopped bleeding, so to say.
This means that at the correction’s worst (thus far), Bitcoin has retraced 19% from the local top of $10,500, established on February 13th.
Wednesday’s move caught many traders with their pants down, so to say, with data from Skew.com showing that over $108 million worth of BitMEX long positions were liquidated in an hour’s time.
This data indicates the drop was likely a byproduct of a long squeeze, whereas large maker participants took advantage of Bitcoin investors’ bullish bias for profit by squeezing long holders out of their positions.
There’s also been some talk about how the collapse in the stock market, which has seen leading indices (S&P 500 and the Dow Jones) fall by 10% in five days, might have affected Bitcoin. Just look to the below chart from Ikigai’s Travis Kling, which shows that there is seemingly a correlation building between the stock market’s volatility and Bitcoin’s recent downtrend.
SPX vs BTC over the last month. pic.twitter.com/M7DeBsUPcQ
— Travis Kling (@Travis_Kling) February 27, 2020
Whatever the case, Bitcoin remains dramatically lower than it was a week ago.
Despite this steep drop from the $10,000 highs, some analysts are starting to show signs that a reversal is imminent, noting how Bitcoin is now in the midst of key support levels.
Bitcoin Could Soon Reverse, Top Analysts Affirm
Filb Filb — the pseudonymous cryptocurrency trader who accurately called that Bitcoin would bottom in the mid-$6,000s and would reverse to the $9,000s by January months in advance — yesterday noted in his Telegram channel that he would start buying BTC if it reached the mid-$8,000s as it did on Wednesday.
As to why he thinks the price will reverse in the $8,000s, Filb Filb cited a confluence of factors: there exists the 200-day simple moving average, 20-week moving average, 50-week moving average, a “Point of Control of [the] upthrust” all around the price of $8,500, and a CME futures gap — suggesting BTC should find buying orders in that region.
He expanded on this idea in the latest edition of his newsletter, Decentrader:
Therefore the confluence of what should be support in the $8500 – $8900 price range is an area which I would expect bears to cover shorts and others to look enter long.
This has been echoed by Ledger Status, who said in a recent tweet that the mid-$8,000s is also where there exists the daily Kijun and the weekly Kijun of the Ichimoku Cloud indicators, further suggesting bulls should start pushing back right now.
Bitcoin’s Bull Run: Is It Intact?
Many have been left asking if Bitcoin’s long-term bull run remains intact; after all, on Wednesday BTC closed under its 200-day moving average, a technical act that may indicate to some that the cryptocurrency has returned to a bear market.
Indeed, the 200-day moving average is seen by both crypto and traditional market investors as somewhat of a bellwether of an asset’s long-term directionality.
Still, investors are not yet shaken, remaining confident in the face of a 19% drop in two weeks’ time.
Dave the Wave, one of the most accurate analysts over the past few months (predicted the bottom at $6,400 and ongoing reversal to $8,500), argued that the cryptocurrency market is going to see two more months of consolidation before it’s “off to the races,” showing how this market is on the verge of breaking a long-term descending resistance.
Two more months then off to the races…. pic.twitter.com/HLl6AUdDK6
— dave the wave (@davthewave) February 26, 2020
Also, top investors like venture capitalist Tim Draper and Mark Yusko have claimed that the fundamentals suggest Bitcoin’s trajectory remains decidedly upward, especially with the impending block reward halving in May of this year.