After a jaw-dropping six-day rally that saw Bitcoin rally from last week’s lows of $6,850 to a peak of $8,450 — a 23% gain — momentum finally stalled in Wednesday, with the leading cryptocurrency retracing hard.
Related Reading: Why Bitcoin Network’s Record 2019 Is Bullish For the Crypto Market
As of the time of writing this, the price of BTC has just plunged to $7,920, creating an eerie daily candle, implying a potential correction back into the mid-$7,000s in the coming days.
This move isn’t entirely unwarranted. Per previous reports from NewsBTC, an analyst noted that BTC’s pumped to $8,450 pushed three indicators to an extremely overextended zone. More specifically, the Relative Strength Index, Stochastic Oscillator, and the Stochastic RSI — all three being indicators to track an asset’s directionality — printed readings higher than they were after Bitcoin’s pump to $10,600 at the end of October 2019.
It is important to point out, though, this candle has yet to close. Thus, the question remains — can bulls step in to save Bitcoin’s still-nascent uptrend?
Per a number of analysts, for sure.
Can Bitcoin Bulls Save the Day?
Firstly, the 50 exponential moving average and the 200 exponential moving average on the four-hour chart for Bitcoin are still in a bullish cross formation, implying that bulls have not yet lost control on a short-term basis.
Not to mention, the price action on a four-hour chart is still indicative of a medium-term trend reversal to the upside. Per previous reports from this very outlet, Adaptive Capital’s new analyst, CL, noted that the Bollinger Bands indicator shows a bullish trend is currently emerging, and that he will be buying any price dips (such as the current):
“When price starts deviating away from the 4hr 200MA, out of the bands, especially after consolidation, and a BB squeeze, a new trend usually emerges. There is not much more to say, I will be buying dips. Send it.”
When price starts deviating away from the 4hr 200MA, out of the bands, especially after consolidation, and a BB squeeze, a new trend usually emerges.
There is not much more to say, I will be buying dips. Send it. pic.twitter.com/GB1RA4M62n
— CL (@CL207) January 7, 2020
Also, Josh Olszewicz, an analyst at Brave New Coin, found that the price of Bitcoin on Coinbase is at a slight premium to the price of the leading cryptocurrency on Bitfinex. This is purportedly an extremely bullish signal that underscored much of the cryptocurrency market’s rally seen in 2019.
Depends On Other Assets
While the technicals support another rally from current levels, it seems that Bitcoin’s strong decline seen over the past few hours has to do with retracements in the price of gold and oil — which BTC has seemingly tracked over the past week.
Both gold and oil fell sharply due to news that the United States and Iran were trying to deescalate their ongoing conflict. This came after the two risk-off assets saw surges due to attacks by both sides of the conflict, which in turn led BTC higher.
This seeming correlation implies that should gold and oil fall any further, BTC should too.
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