Bitcoin forecast: Back to the drawing board

Once again, Bitcoin bulls attacked critical resistance levels, and once again they failed. While bears have yet to prove their dominance with driving BTC/USD below at least $8,000, the general technical picture looks unsettling. Various cryptocurrency analysts take it to crypto Twitter to discuss the red flags that may signal a new massive sell-off and a beginning of a long-term bearish trend.

Read on to know what to expect.

What’s going on in the market

The cryptocurrency universe seems to be at a crossroads. Bitcoin and all major altcoins are trapped in recent ranges, unable to recover from a strong sell-off experienced in mid-September. 

The fundamental background has hardly changed during the week. Global regulators remain, mostly skeptical towards digital currencies. Though, it seems that at this stage their attention is captured solely by Facebook’s Libra project. The House Financial Services Committee (HFSC) raised questions about the viability of the project, while the European authorities expressed concerns that this project may create a separate economy atom the detriment to those would not use the coin minted by the tech giant.

Meanwhile, Facebook is determined to go ahead with the project. Libra Association published a roadmap where it outlined its future steps. According to the roadmap, the mainnet will be launched into the operation in 2020. Currently, the team is deploying the Pre-Mainnet where Libra partners with full nodes can test the functionality of the system and communicate with each other. 

However, neither Visa nor Mastercard are in a hurry to seal the deal with the project. They are concerned about regulatory backlash. PayPal, a leading payment processing platform, also takes a critical approach to its partnership with Libra Association. The company did not attend the meeting with Libra on October 3.

Read more details here: PayPal PayPal on the verge of quitting Facebook Inc. Libra project

Visa and Mastercard unsure of involvement with Facebook’s Libra project

Facebook’s Libra now has a roadmap

Libra aside, Chicago Mercantile Exchange (CME) announced that it would not launch deliverable Bitcoin futures to compete with the Bakkt platform. The company said that they did not see the demand for the product. Earlier it has become known that CME plans to launch Bitcoin options, pending regulatory approval.

Read more details here: CME has no plan to launch deliverable Bitcoin futures

Notably, researchers from TokenAnalyst discovered a correlation between Bitcoin price growth and Tether issuance. According to the latest paper, BTC/USD has grown in 70% of times when new USDT coins were mined on Ethereum blockchain. The experts believe, this correlation boils down to the fact that ERC-20 USDT is fairly easy to use, which is critical for traders that need to quickly get in and out of their positions when the market is moving fast.

BTC/USD, daily chart

Looking technically, Bitcoin’s movements have been limited by $7,700 on the downside and $8,500 on the upside this week. The first digital asset attempted a breakthrough from the range, but the upside momentum faded away on approach to SMA200 (Simple Moving Average) on a daily chart. BTC/USD has been hovering below this critical line since September 26. Typically, this development is considered as a bearish signal. Last time BTC/USD traded below SMA200 in February 2019. We will need to see a sustainable move above this barrier to escape the bearish scenario. However, the longer the price stays below this SMA, the darker the forecasts are. Eventually, the apocalyptical forecasts may turn into a self-sustaining prophecy. 

Should this resistance is taken out, the recovery may be extended towards $9,000 strengthened by the middle line of a daily Bollinger Band and $9,500 (the lower boundary of the broken triangle pattern). Once it is out of the way, the upside is likely to gain traction with the next focus on $10,000 and $10,400 (a confluence of SMA100 daily and the upper boundary of the above-said triangle).

On the downside, a sustainable move below $8,000 will open up the way towards $7,770-$7,700. This support area encompasses SMA100 on a weekly and the lowest level of the current week. This area stopped the sell-off twice, on September 26 and September 30. It means that Bitcoin bears are going to have a hard time pushing the price lower. 

Once they succeed, the downside momentum is likely to gain traction with the next focus on $7,450 (the middle line of the Bollinger Band on a weekly chart). The next support awaits us at $7,200 ( the lower line of a daily Bollinger Band) and $7,000.

The Forecast Poll of experts worsened since the previous week. However, expectations on a weekly chart are bearish, while longer-term forecasts tend to be more optimistic. The average price forecasts on all timeframes are well below 9,000.