- Bitcoin and major coins had a volatile week.
- PlusToken scam may have triggered the sell-off.
- Cryptocurrency exchanges are pivoting towards regulatory compliance.
- BTC/USD is moving within a descending wedge.
The cryptocurrency market lived through another bloody week that saw Bitcoin's collapse below $6,500 and spectacular return above $7,400 within a single day. Altcoins demonstrated similarly dramatic moves. Moreover, many assets hit the new lows of 2019 and failed to recover to the levels that preceded the decline. The total capitalization of all digital assets in circulation is registered at $190 billion. Bitcoin has returned to the levels recorded on the previous week on Friday, while both EThehreum and XRP are down 11%. The Bitcoin dominance jumped above 68%, signaling that the first digital asset is regarded as a coin of choice in the periods of market uncertainty.
While the real reasons for the market volatility remain unknown, there is a theory that the sell-off was triggered by PlusToken founders selling their coins. The project is one of the largest Ponzi schemes of the cryptocurrency industry that cost investors over $3 billion in digital currencies. The organizers of the scam attracted investments in BTC, ETh and other coins and promised high returns. The scheme was widely popular in Asian countries, particularly in China.
According to the cryptocurrency research company, Chainalysis, the founders of PlusToken disposed of 25,000 BTC out of the total amount of about 45,000. They used cryptocurrency mixers to split the sums and make it untraceable.
Later during the week, the Whale Alert service reported that 789,525 ETH tokens were transferred from PlusToken wallet to an unknown wallet; however, this time, the transaction did not result in a sharp sell-off on the market.
Coinbase and Binance bows to regulatory requirements
The largest cryptocurrency exchanges once again confirmed their push to regulatory compliance. Thus, the US-based Coinbase obtained a patent for a system that would allow sending Bitcoins via emails. However, the proposed solution will enable the platform to block suspicious transactions. Another patent received by the company will allow creating a system that will block doubtful accounts automatically.
The company claims that these moves will bring more transparency and stability to space, but the industry sees it in another light. Many cryptocurrency experts believe that the industry is moving away from the original idea of privacy and decentralization and merges with the traditional banking sector.
In a separate development, Binance Singapore blocked the withdrawal request of the customer because he used a privacy-focused Bitcoin wallet. The trader claims that the exchange grilled him about the nature of his transactions and asked to provide additional personal information.
The Christmas season is just around the corner, which means that the market may become either too dull or too exciting place. Low trading activity and virtually non-existent liquidity create perfect conditions for sharp price movements and manipulations. If crypto whales have a wicked plan on their mines, now is the right time to roll it out.
BTC/USD, the technical picture
On the weekly chart, Bitcoin (BTC) is moving within the long-term descending wedge with the channel support currently at $6,380. Notably, during the recent sell-off, the price stopped within a whisker of this barrier and reversed back towards $7,000. This price action confirms the importance of this level and implies that it will serve as strong support in the case of new bearish waves. Descending wedge is a bullish pattern; however, the price may decline much lower before the reversal. If the price continues declining at the same pace, we may reach $4,500 by the time of halving.
If thee above said trend support line is broken, the decline will gain pace and $4,500 will be reached much sooner.
On the upside, we will need to see a sustainable move above $8,400 for the upside to gain traction. This resistance is created by 50% Fibo retracement for the upside move from December 2018 low to the highest level of $2019. Once it is out of the way, the upper boundary of the above-said descending wedge will come into focus. Currently, it is registered at $9,100. This is a pivotal area for Bitcoin, as it will confirm the wedge formation and create strong bullish impulse with the next target at $10,000 and ultimately $14,000.
While the weekly RSI (Relative Strength Index) remains flat, the daily indicator is starting to reverse to the upside, which may signal that the recovery is underway.
The Forecast Poll of experts has improved since the previous week. The expectations on monthly and quarterly timeframes turned from neutral to bullish, while the weekly expectations remained neutral. However, the average price forecast on all timeframes is below 8,000. Notably, the quarterly price forecast deteriorated significantly, which means that the experts are cautious about Bitcoin's long-term perspectives.
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