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A bearish sentiment is gripping the cryptocurrency market. Is bitcoin about to throw in one of its heart-stopping 20 to 30% plunges?
A vertiginous drop?
Since bitcoin made its new local high at $38,400 the price has fallen down over the ensuing last four days. Could this be the start of a move that turns into something a lot bigger?
The crypto altcoins have followed bitcoin’s lead and they are down more than $30 billion in collective market capitalisation, to total $403 billion. Support on the trend line breakout on the Total 3 market cap is just below at $398 billion.
So, is this the beginning of a plunge that can take bitcoin back down to its own $35,000 support, and a possible vertiginous drop for the altcoins, taking them back down to some unearthly lows?
Zoom out
Possible, but certainly not probable. Traders who are beginners are always told to zoom out. It’s so easy to lose perspective in the weeds of short term trading on the hourly or 4-hourly time frames.
Source: Trading View
Even on the short term time frames for bitcoin a series of higher highs and higher lows can clearly be seen. For this to break down bitcoin will need to dip below $36,650. Obviously not beyond the realms of possibility, but considering the uptrend, not so likely.
Source: Trading View
Zooming out to the macro level of the weekly time frame, bitcoin is still under the all-important $38,000 level, and if there is to be a retrace, this is a likely turning point. However, it’s also above $35,000. With this in mind, the weekly and monthly closes are going to be very interesting, and will tell us far more about the bitcoin direction going into the end of the year.
A bounce incoming?
So will the sky fall on our heads in the next few days? Nothing can be ruled out when markets are concerned, but the possibility is that the market could at least see a bounce, and it may come soon. Traders should employ proper risk management and trade with caution.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
