Today, bitcoin's continued to drop. In the past 24 hours, it lost another 10% after losing the same amount yesterday and is now trading around $46,800, according to CoinGecko. At its worst point in the day, it went just below $45,000.
The reversal in the price trend we spoke about yesterday is here to stay.
Today's decline is attributed to the "Tether FUD" (Fear, Uncertainty and Doubt).
According to the Barron's Avi Salzman:
"The attorney general settled with Tether, which operates the Tether coin, and Bitfinex, an exchange where people can trade tether, on Tuesday. The companies agreed to pay $85 million and cease trading operations with New York customers."
Nevertheless, we think that this won't affect tether (USDT) and that players in the cryptocurrency market will continue to operate with the cryptocurrency as usual.
For now, we expect a continuation of the downtrend, and we are targeting a support zone of around $45,000. If this critical level does not hold, then we expect the cryptocurrency to move toward $43,000. Even in a worst-case scenario, there should be support around $41,000.
Adding to that, notice how bitcoin's price touched the predicted range's bottom (blue) and right after it suffered a minor wick, it enjoyed a quick recovery.
Since yesterday, selling volume declined substantially, even though we think sellers are now in control. Hence, do not expect bitcoin's price to resume its uptrend shortly. As we wrote above, it might take a while, perhaps until the end of this week.
In sum, while bitcoin remains around $48,000 we have every reason to be bullish about the shortto medium-term price action. Even with the current price drop, we think the long-term uptrend is intact.
Therefore, we believe many buyers are eagerly awaiting to add to their bitcoin positions, pushing the price back toward a new all-time high.
As a reminder, we are confident that BTC/USD will continue to move upward if:
- BTC/USD remains above its 20-day MMA (red), 50-day MMA (green), and 200-day MMA
(blue). - BTC/USD doesn't drop below $45,000.
- BTC/USD daily volume goes above its 21-day Moving Average soon.
What Do Traders Think?
This week's first tweet comes from Pomp (Anthony Pompliano), co-founder of Morgan Creek Digital and The Pomp Letter writer.
In his post, Pomp highlights a critical statistic that is key to understanding why we remain bullish on bitcoin's short-term price.
As he wrote:
"60% of bitcoin in circulation hasn't moved in the last 12 months. Includes hundreds of percent in appreciation and even a 50% drop in a single day."
This shows that people and institutions who buy bitcoin seem to be interested in hodling the cryptocurrency in the long-term.
While this remains true, we doubt there will be room for a bear market.
The next post comes from Marty Bent, the Editor-in-Chief of the “Marty Bent” newsletter.
In his post, Bent shares a few words of wisdom regarding bitcoin’s ultimate goal. We believe that during downturns, it’s essential to focus on why we’re here.
As Bent rightfully points out:
“As more people discover how powerful and world changing #Bitcoin is, the price crashes up harder.”
We think this is a brilliant takeaway since a growing number of analysts were expecting volatility to decrease as the total bitcoin market cap grew. However, perhaps it may be too early for that, and until bitcoin is above $100,000, 50% price dumps are to be expected.
Adding to that, if one is unsure if bitcoin is here to stay, we should always remember that the higher the price grows, the closer bitcoin is to become a global store-of-value.
The next tweet comes from Jan & Yann, Co-founders at Glassnode.
In their post, Jan & Yann share the “Bitcoin: Adjusted SOPR (aSOPR) vs. Bitcoin: Futures Perpetual Funding Rate”. According to Glassnode, “The Spent Output Profit Ratio (SOPR) is computed by dividing the realized value (in USD) divided by the value at creation (USD) of a spent output.
As the authors wrote:
“Tactical Indicators such as SOPR and Funding Rates have just entirely reset back to healthy levels. #Bitcoin bottom should be in for now.”
The above chart shows that as the price of bitcoin dropped, these essential indicators had a chance to reset as well. We also agree with the authors in the sense that we highly doubt bitcoin will go back below $45,000.
This data also shows that short-sellers have been in control of the market during the past few days, but it now seems buyers are back in full force.
Hence, in our opinion, the current bottom is in.
The last post of the week comes from Nathaniel Whittemore, host of “The Breakdown Podcast”.
Whittemore shares an essential chart in his post we think every investor and trader should know by heart.
Whittemore shared a chart of the bitcoin’s price since mid-2016, and what it shows is that BTC/USD does not go up in a straight line.
This means that investors, especially traders, should be wary of high volatility, especially when using leverage.
Additionally, the magnitude of these price drops can be quite scary. It was not uncommon for BTC/USD to drop between 30% and 40% in the prior bull-run.
To conclude, we think these bumps in the road are a magnificent way to accumulate more bitcoin.
Bitcoin Price Prediction
Today, bitcoin's price dropped another 10%. Since yesterday, it has lost almost 20%.
At its worst point, it went below $45,000, but it quickly recovered. At the time of this writing, BTC/USD was trading around $47,000
Yesterday, we wrote that we expected the price to keep moving downwards until it reached a low at around $45,000, before recovering above $48,000. That's precisely what happened, and the price touched the predicted bottom perfectly, with the exception of a minor wick.
However, we do not expect this sudden drop to keep going for much longer. We hope that by the end of the week, bitcoin's price returns to its uptrend.
How do we think the price will trade today? As shown in the above chart, we believe that bitcoin could top around $53,000 if new buyers enter the space. Still, that is highly unlikely. We think that short-sellers may continue to push down bitcoin's price.
On the other hand, we don't expect the cryptocurrency to drop much below $41,000 due to the sheer number of buy orders located around this price region. Also, we doubt bitcoin moves below its 20-day Modified Moving Average (MMA).
To finalize, the Volume Profile Visible Range (VPVR) shows a high number of buy orders between $45,000 and $50,000, and then again at $41,000, which means BTC/USD should not go below $40,000, even if things go south.
As a reminder, we believe BTC/USD will most likely return to its uptrend in less than a week's time.