- Bitcoin dropped below $5,000 for the first time since October 2017.
- However, it hit $4.950 and recaptured the round number.
- There are three reasons to believe this crash is not real and the Bitcoin bulls can be cautiously optimistic.
The BTC/USD price hit $4,950, the lowest since October 2017. But is it just a false break? Here are three arguments making the case:
1) Lack of Momentum
The fall of October 14th was dramatic: the price approached $6,000 with determination and totally collapsed once it crossed the round number. Bitcoin reached $5,450 quite quickly and could never recapture the round number of $6,000. Moreover, it broke below $5,770, the previous 2018 trough and fell to the lowest levels since October 2017.
The drop below $5,000 is not that dramatic. The price went down quite slowly throughout the day. While the move below $5,000 looked swift, the price only reached $4,950 before bouncing back and seeming comfortable again above $5,000.
2) Deeply oversold conditions
The Relative Strength Index (RSI) on the daily chart is well below 30 for several days, followed that November 14th collapse. While financial assets do not always bounce back after the RSI drops below 30, they cannot stay there for too long. Five days is a lot to have an RSI of around 16.
So, when everybody is short, who is left to sell? A buyback by some bulls is natural at such extreme conditions.
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3) Bitcoin Cash is not Bitcoin
One of the primary drivers for the fall was the mess around Bitcoin Cash. BCH, which emerged out of a hard fork out of Bitcoin back in August 2017, has its own hard fork. The competing forks are busy with hash wars, with some exchanges warning of issues with one of these spin-offs. The story dampened the whole crypto-sphere.
However, BTC is not BCH nor any of its forms. The stories are not related.
Another reason for the impatient sell-off was the lack of a Bitcoin ETF. However, the SEC has not shut the door on approving such an instrument, a move that would make mainstream investment easier.
Brave to Buy Bitcoin?
All in all, there is a case for saying that this sell-off is exaggerated. A buying opportunity? There could be hundreds of dollars on the BTC/USD price just to push it out of oversold conditions: RSI > 30. There are also other buyers who think BTC is a bargain. But can they outweigh the sellers?
It takes a lot of courage, even from the HODLers and the bulls. See: Black Friday for the Brave
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