Following a week of slow but steady gains Bitcoin fell off the digital cliff again yesterday with a flash crash that wiped out all progress made so far this year. Analysts are now looking at a short term correction if BTC can hold on to where it has currently fallen.
Further Downside Expected on Consolidation
In an epic dump that wiped out $8 billion in 60 minutes crypto markets are back near $120 billion market capitalization again. Bitcoin led the fall when it failed to break resistance at $4,050 twice yesterday. The first plunge dumped BTC to $3,850, which it held for 8 hours before a second swift purge send it tumbling to $3,670. The net result was almost 10% lost in under 24 hours.
Prominent analyst Alex Krüger has highlighted $3,600 as a key level stating that consolidation below this price would likely lead to further downsides;
What a majestic dump. $BTC back to my buying area of 3500-3600. Below 3300 exit and reassess. I'd like to see BTC ending the day above 3700. Consolidation below 3600 (bottom of prior area) would tilt the balance towards further downside.
— Alex Krüger 🇦🇷 (@Crypto_Macro) January 10, 2019
Bitcoin is currently at its lowest level for the week as it plunged through previous support at $3,850. It has not been below $3,600 since the mid-December dump which saw all cryptos reach their lowest levels for well over a year.
Bitcoin fell to just below $3,200 on December 15 but managed to recover over 30% in the following ten days to reach a high of $4,200 during the ‘Santa rally’ on Christmas eve. Since then it has consolidated between $3,650 and just over $4,000.
At the moment Bitcoin is still holding within this range bound channel which is why $3,600 is a key level of support. A break through that could see things back at the 2018 low again very quickly. If Alex gets his wish and Bitcoin ends the day above $3,700 it could retest $4,000 again in the coming days.
Other prominent analysts have predicted further losses as Bitcoin faces a huge wall of resistance at $4,000. Using a plethora of different technical indicators Murad Mahmudov, who has predicted things pretty accurately in the past, said that Bitcoin is facing a very tough task breaking above $4k and that has been clearly evident with yesterday’s dump.
On the more positive side of things CEO of DoubleLine management, Jeffrey Gundlach, told CNBC that Bitcoin reaching $5,000 would be an ‘easy 25%’. He and others have noted that Bitcoin is currently trading in a $3k to $5k range though it hasn’t been anywhere near $5,000 since it plunged through it so quickly on November 19.
The crypto winter is far from over and Bitcoin is still the bellwether for things to come.