Ouch. Over the past few hours, Bitcoin has finally seen some volatility play out after a multi-week lull, plunging below $7,500 after holding in the low-$8,000s for days on end. Per previous reports from NewsBTC, this move largely caught traders off guard, with there being a massive long liquidation event of over $200 million on BitMEX amid this crash.
While the selling pressure has paused, there are some technical signals that imply bearish continuation over the coming days.
Yesterday, analyst Philip Swift noted that in the previous market cycle, Bitcoin followed a pattern of bottoming at the 200-week moving average, then seeing its first bull market rally to bottom at 100-week moving average.
Bitcoin seems to be doing the same this time around. But if the 100-week moving average is lost, a potential macro bear market or at least months more of consolidation could follow suit.
Surely it couldn't be this simple…could it?!
Shoutout to @Pladizow who pointed out price touching the 100W MA.
— Philip Swift (@PositiveCrypto) October 22, 2019
That’s not all, this move lower will slightly accelerate the occurrence of the fabled “death cross”. In a few days’ time from the time of publishing this, Bitcoin will experience a “death cross” when a short-term moving average, often the 50-day as it is indicative of short-term trends, crosses below a long-term moving average, often the 200-day. As Investopedia accurately defines the term, “The death cross is a technical chart pattern indicating the potential for a major selloff.”
Long-Term Bullish for Bitcoin
Although the technical picture for Bitcoin now seems to be bearish for the short run, some have asserted that the cryptocurrency’s fundamentals remain strong, at least in the long run.
In a Twitter post published after the crash, Galaxy Digital’s Mike Novogratz said that he thinks it’s wise to be long on both gold and BTC, adding that while the cryptocurrency will be more volatile than its physical counterpart, the same macro trends will drive the assets in the same way.
— Michael Novogratz (@novogratz) October 23, 2019
Indeed, he has previously said in a CNN interview that he expects for Bitcoin to hit $20,000 in 18 months’ time. Novogratz attributed this prediction to macro trends that may favor decentralized money: negative interest rates, geopolitical unrest, and mistrust in centralized systems.
Featured Image from Shutterstock