Bitcoin didn’t start the week off hot. On Monday and Tuesday, the leading cryptocurrency tanked, plunging from $7,150 to as low as $6,450 in 48 hours’ time. Altcoins followed suit, with Ethereum’s price performance actually going negative on the year during this move, further accentuating the strength of this downtrend.
This strong sell-off, which came after BTC consolidated above the $7,000 support level for weeks on end due to a holiday lull, made many traders fear that doom was imminent for cryptocurrencies.
Though, it seems that bulls don’t want to let Bitcoin and its ilk die. On Wednesday, Bitcoin rocketed back to $7,300, surging higher as bears failed to keep buyers suppressed. The price of BTC has returned to $7,000 as of the time of writing this, where the asset seemingly intends to establish a base.
While it may be too early to tell, analysts say that this latest move confirms that a reversion to a long-term bull trend is imminent, with selling pressure seemingly slowing after a six-month downtrend that brought Bitcoin down by 50%.
Bitcoin Shows Sign of Reversal
On early Wednesday morning, things looked grim for the Bitcoin market: prices were down some 10% in 48 hours and analysts asserted that a “capitulation” event was imminent, citing key indicators that implied that this latest sell-off was just beginning.
But, out of nowhere, the cryptocurrency shot higher, rocketing 11% higher over a 12-hour period, reclaiming key support levels in the mid-$6,000s, then low-$7,000s. This strong upswing liquidated some $80 million worth of Bitcoin shorts, cryptocurrency data provider Skew.com says.
This move, countless analysts have said, validate a number of signals that Bitcoin has finally found a bottom on a macro scale, and is thus ready to reverse to the upside from here.
Thomas Thornton, a hedge fund services specialist and market analyst, posted the chart below prior to this latest move, showing that the TD Sequential Combo indicator suggests that BTC’s candle on Tuesday was a “buy 13.” 13 candles, the TD Sequential indicator suggests, are indicative of impending price reversals.
Also, creator of the indicator, Tom Demark (hence TD Sequential), remarked in a recent Bloomberg segment that 13 candles were registered when Bitcoin hit $20,000 in December 2017 and when BTC cratered to $3,150 on December 14th.
Bitcoin with new DeMark Combo and Sequential buy Countdown 13's. Needed to confirm is a price flip up (new 4 day closing high) pic.twitter.com/7SCPVxxFfU
— Thomas Thornton (@TommyThornton) December 17, 2019
There’s also Willy Woo, a prominent cryptocurrency hedge fund manager who recently remarked that on-chain momentum, which many analysts say can predict price action, has crossed into bullish territory. With this in mind, he asserted that the “bottom is most likely in,” meaning that any move lower than the $6,500 plunge “will be just a wick in the macro view.”
Institutions Involved in This Move
While it isn’t clear what triggered this over 10% reversal, it has been implied that institutional traders have been involved.
Bakkt Volume Bot, a Twitter bot dedicated to tracking the market activity Bakkt’s Bitcoin derivatives market, the volume the exchange has processed during Wednesday’s trading session surmounted 5,690 BTC — a sum valued at $39.8 million as of the time of writing this article.
This beat the previous record by hundreds of BTC. Also, the CME’s Bitcoin futures market saw its best day in weeks, further implying that institutions were heavily trading Wednesday’s volatility.
Bakkt’s rocketing volume metrics come hot on the heels of other reports from the volume bot which indicate that open interest in the derivatives contracts has recently passed $6 million — a sign, some say, that institutions are gaining interest in the cryptocurrency market, which itself is a long-term bullish sign.