This week has been quite a tumultuous one for the Bitcoin market. As of the time of writing this, the cryptocurrency is effectively flat on the week, posting a slight loss of 1%. But this statistic hides the truth: this week has seen BTC undergo two 10% swings, one to the downside, then another to the upside, all within the span of a few days.
Bitcoin’s latest bout of volatility has made the cryptocurrency put in a new six-month low at $6,400, plunging to that price point early Wednesday as bulls failed to step in. While BTC is now trading at $7,200, having recovered 10% as aforementioned, analysts are sure that a retest of these lows is an inevitability.
Here’s more on why.
Why BTC May Soon Retest $6,500
Cantering Clark, a prominent cryptocurrency trader, recently remarked that the current price action is rather reminiscent of the infamous 42% “China pump” that brought BTC to $10,500. Indeed, as Clark depicted below, the two moves were of very similar structure, with there being a strong dump to precede a strong recovery to historical resistance levels, to then stop rallying there.
All I see is a weaker version of what we had before, because we likely have shorts that have been sitting in better positioning from earlier PA.
i.e. Squeeze was less crowded = Less fuel
— Cantering Clark (@CanteringClark) December 20, 2019
Noting this similarity, the analyst concluded that there is a good likelihood that there will be a “series of head-fakes,” then a “slow drift back down to the lows” of $6,400-$6,500 in the coming weeks.
It isn’t only Cantering Clark who believes that a move to return to these lows is possible. Crypto analyst Mac noted in the wake of this spike upwards that the Money Flow Index has started to taper off as BTC failed to surmount a key horizontal resistance at $7,400, BitMEX contract funding has reset in favor of bears, and the Open Interest indicator has hit a local bottom, implying that shorts may soon start rebuilding positions.
Related Reading: Bitcoin at $250k? Analysts Weigh in on Draper’s “Bizarro” Call
Is Bitcoin’s Uptrend Intact?
While the short-term outlook may look harrowing once again, many assert that 2020 will still be a great year for the cryptocurrency market.
TokenDaily recently released a report titled “THE 2020 CRYPTO CRYSTAL BALL,” in which the firm published predictions from industry executives about the upcoming year for the cryptocurrency market. Many of those mentioned remarked that they expect for the 2020 halving to have a resoundingly positive effect on the Bitcoin market. The Winklevoss Twins of Gemini, for instance, said:
“The bitcoin halvening should already be priced in but isn’t (it never has been) and it therefore will catalyze a large bull run (as it always does).”
That’s not all. Thomas Thornton, a hedge fund services specialist and market analyst, recently revealed that Bitcoin’s chart with the TD Sequential Combo indicator suggests that a “buy 13” candle was just printed.
13 candles, the TD Sequential suggests, are indicative of impending price reversals; they’re also pertinent here as these same candles were registered by the TD Sequential when Bitcoin hit $20,000 in December 2017 and when BTC cratered to $3,150 on December 14th last year.
The historical importance of 13 candles in terms of Bitcoin’s long-term price trends implies that BTC has finally bottomed and, as such, is ready to see a strong bullish reversal from here.
Featured Image from Shutterstock