Ouch. Once again, bears have asserted control over the cryptocurrency market, pushing Bitcoin (BTC) under the key $8,000 support level after a multi-week battle above said level.
As of the time of writing this article, the cryptocurrency is changing hands for $7,450, down some 6% in the past 24 hours.
While bulls seem to be propping up the price for the time being, traders and analysts claim that this latest spike downward may be the start of a longer-term bearish trend that could push Bitcoin below $7,000 and into the $6,000s.
Bitcoin Poised to Tumble Lower
Late last month, Bitcoin shot up by 42% in a single day’s time, marking the fourth-largest daily move in the cryptocurrency’s short though storied history. While many thought that this would reverse the bearish trend that afflicted the crypto markets for months, it seems that this isn’t the case.
Since the 42% jump, the price has retraced nearly all the way back to where it is started, effectively as if the past month of price action never took place at all. Many haven’t taken this too well, of course.
Prominent gold proponent Peter Schiff, for instance, wrote on Twitter that he thinks that Bitcoin has the potential to drop by upwards of 80% to $1,000. More specifically, Schiff said that Bitcoin is nearing the neckline of a head and shoulders chart pattern, which suggests that if it’s broken, a measured move to $1,000 will be had.
#Bitcoin is nearing the neckline of the head-and-shoulders top I pointed out before the Oct 25th 40% pump. The right shoulder is now shrugged and the neckline slanted and parallel to the shoulders. If it breaks the price objective for the dump is $1,000 to complete the pattern.
— Peter Schiff (@PeterSchiff) November 21, 2019
Also, as reported by Blockonomi, an event of Bitcoin “miner capitulation” has just taken place, according to the Hash Ribbons indicator. For those unaware, miner capitulation is when miners are forced to sell the Bitcoin they earned through their operations, often all at once, to keep the lights on, cash out, or to upgrade their systems for the future.
This may sound relatively innocuous — of course, miners need to sell Bitcoin to fund their operational expenses — though analysts say that it becomes a vicious cycle.
The last time the Hash Ribbons indicated miner capitulation was in late-2018, just days before Bitcoin began its 50% crash from $6,000 to $3,000. The time before that was in 2016, when the Hash Ribbons indicated capitulation just days before a 30% drop.
The news cycle as well seems to be against Bitcoin, at least for now. Case in point, As reported yesterday that that Binance’s Shanghai office was recently raided by local police.
The details aren’t clear, though The Block suggests that Binance closed the doors of the location shortly thereafter, telling employees of that location to work remotely or relocate to Singapore. Binance has since denied this report, calling it a “rumor,” then citing their assertion that there is no Shanghai office.
Regardless, some say that the fears that China is seriously cracking down on cryptocurrency startups, even if they aren’t offering services in the country, may cause some selling pressure in the coming weeks, on top of what the market already has in store for investors.
Do Bulls Have Anything to Bet On?
While the sentiment in this market is overwhelmingly bearish, there may be some hope for bulls — albeit quite limited.
The Tom Demark Sequential indicator, which uses time and prices to determine trends and reversal points, printed two “buy nine” candles on the CME and Grayscale’s Bitcoin Trust charts earlier this week. The TD Sequential, popularized in the cryptocurrency community by Wall Street veteran Tone Vays, suggests that a relief rally could be had.
And unfortunately, that’s all bulls have to stand on.