- The cryptocurrency market has lived through a roller-coaster week.
- The long-term Bitcoin’s bullish trend remains intact.
What an exciting week on the cryptocurrency markets! Bitcoin (BTC) came close to $14,000 only to crash towards $10,000 in less than 24 hours. A stellar growth followed by a dramatic crash resulted in a rush to exit from altcoins that also demonstrated double-digit losses and gave in nearly all weekly gains. FOMO (Fear Of Missing Out) environment morphed into FUD (Fear Uncertainty and Doubt) sentiments.
Nobody expects the Spanish Inquisition!
Facebook’s Libra project faced stiff regulatory resistance both in the US and Europe. Moreover, several partners started to express concern about the viability of the project and hinted that they would opt out if anything goes against the plan. Even though Facebook tries to defend the project saying that it will not have control over the network, these developments mean that the agitation gave way to rational thinking and led to a re-evaluation of the project outcomes.
While the true reasons for the sudden sell-off remains unknown, technical correction from the overbought levels certainly played its part and squeezed a great deal of weak longs from the market. Some experts noted that Coinbase downtime served as an initial trigger for the sell-off, however, this theory does not hold up against criticism. Actually, the short-term service unavailability might have been caused by the strong movement on the market. Other cryptocurrency operators including Robinhood also experienced similar issues.
Apart from that, the news that hackers used vulnerabilities of Singaporean cryptocurrency exchange Bitrue to steal $4.5 million in XRP and ADA coins added oil to the fire and increased the downside pressure on the collapsing market on Thursday.
BTC/USD, 1D chart
A sharp sell-off from the highest level in more than a year interrupted the stellar growth of BTC/USD. However, despite the strong downside momentum, the coin managed to stay in the green zone and gained over 20% on a week-on-week basis. At the time of writing, BTC/USD is changing hands at $11,700. The coin has recovered from the recent lows of $10,300 and regained bullish momentum after a sustaim=nable move above $11,000.
The recovery above $12,000 is regarded as a pre-condition needed to resume the movement within the long-term upside trend. As long as the price stays below the said barrier, we are in for range-bound trading. However, once it is cleared, the upside is likely to gain traction with the next focus on $12,600. This resistance is created by the upper boundary o 1-day Bollinger Band. The next critical barrier awaits us on approach to $13,000 followed by the recent high of $13,700
Considering that the Relative Strength Index (RSI) on a daily chart stays outside an overbought territory and points upwards, this handle may be tested within the nearest future. However, the bulls should be careful as those who got burned amid the recent sell-off may choose to take profit on approach to an important level.
On the downside, BTC/USD needs to settle above $11,000 (SMA50 4-hour chart) to mitigate the immediate bearish pressure. A sustainable move below this handle will open up the way towards the next support of $10,450 (the lower boundary of 4-hour Bollinger Band This area is followed by psychological $10,000 protected by stop orders. New buying interest is likely to appear on approach to this handle and create a new recovery wave.
However, once it is out of the way, the sell-off is likely to gain traction with the next focus on $9,700 (the middle line of 1-day Bollinger Band) and $8,660 (SMA50 daily).
The Forecast Poll of experts shows a mixed picture. Short-term expectations are unclear, while long-term forecasts tend to be bearish. Though, the average price forecasts are well above $11,000. Moreover, the quarterly forecast implies that the price may move above $13,000.
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