Bitcoin (BTC) prices dropped to a 50-day low of $6,630 early Friday, hovering around $6,800 since, with bulls lining up to say the bottom is near, but bears seeing thousands of dollars of room for this to keep plunging.
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With every decline, the bulls call the bottom, but it’s a bottom that no one can grasp because the fundamentals are fundamentally unknown and gauging sentiment is a game of psychic proportions.
And for the bulls relying on technicals, the picture is also skewed. CoinDesk talking heads say the bottom is near because bitcoin “tends to reverse course every time the relative strength index (RSI) drops to or below 30.00”—and right now it’s close, at 32.00.
CoinDesk sees the bottom at $6,600-$6,000 over the weekend.
Crypto followers have been talking about a “Death Cross” for weeks. The ‘Death Cross’ is when charts reflect a crossover between the 50-day and 200-day moving averages—in other words, between the short-term trend and the long-term trend.
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But again, traditional technical patterns may not apply.
"When we are talking about bitcoin, I think it's important to remember that we don't have much history to go off of to identify long term trends," Jim Iuorio of TJM Institutional Services wrote to CNBC on Wednesday. "That being said, any time the 50-day crosses the 200-day, it should flash a warning…and when you couple that with the fact that bitcoin has been trending steadily lower since the launch of futures, I think that it is a major negative," he added.
As it stands, bitcoin is having its worst quarter ever, marking a decline of more than 45 percent since January 1, and losing almost $115 billion in market capitalization during that time period. Related: Russia Moves To Outlaw Bitcoin As Money
Based on available data, the last time it came close to a decline of this size was in the first quarter of 2014, when it lost close to 38 percent. The original crypto’s biggest price rise was in the first quarter of 2013, when it gained an astounding 599 percent.
What comes next? No one knows.
Analysis from crypto talking heads doesn’t help, with Fxstreet noting, for instance, that “bitcoin is at an inflection point where it would either break out towards new highs or the price could fall by half even from current levels”.
Bitcoin has shown some resistance at the $6,600 mark today, but there are no imminent signs of recovery, though it hasn’t hit is 2018 low of $5,947 from February 6.
In the meantime, this is a fantastically dreamy market for bears.
As pointed out on Forbes, “suffice it to say that bears have had the better part of this deal. If one takes out the 223% run-up when the Bitcoin Bubble was building, the bulls have had to increase of 35% and 64% while the bears have seen drops of 34%, 59% and 40%.”
Either way you look at it, bitcoin can mint billionaires. You just have to decide which side of the fence you’re on, and right now, it’s the side with the bears.
By Michael Kern for Safehaven.com
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