Late last week, Bitcoin (BTC) finally broke out after days of consolidation, surging above $9,000 for the first time in weeks. At the high yesterday, the cryptocurrency was changing hands for $9,200, up some 40% in a month’s time as reported by Ethereum World News just the other day.
But, on Sunday, BTC suddenly fell off a cliff. Within a few minutes’ time — yes, literally a few minutes — the leading cryptocurrency slipped by 7%, plunging from $9,150 to $8,600 (as low as $8,450 on some crypto exchanges).
This drop has made some analysts think that more pain is on its way.
Bitcoin Analysts Fear the Worst
As pointed out by cryptocurrency trader CryptoParadyme, this move has seen Bitcoin see a clear rejection at the three-day Ichimoku Cloud, with the price failing to even enter the key price range marked by the indicator.
This could be seen as a bearish sign, for the Cloud will trend lower in the coming days. The rejection suggests BTC could follow the indicator lower in the coming weeks.
Ichimoku lesson of the day. The cloud is resistance until proven otherwise. pic.twitter.com/snnT3OxZFS
— Dyme (@CryptoParadyme) January 19, 2020
This skepticism was echoed by trader CryptoHamster, who drew attention to a number of bearish signs the cryptocurrency’s chart has seen over the past few days: BTC’s price saw another clear rejection at the key 200-day simple moving average, the trend indicator Fisher Transform has seen a bearish crossover for the first time in a while, and the BitMEX funding rate has been positive for a while, implying bulls may be overextended.
Bearish divergencies and the rest played out (a short squeeze and a dump).
– 50% Fibo pull back
– might be a long squeeze (fake breakout of the wedge)
– 200MA rejection
– Fisher Transform bearish crossover
– Funding Rate is negative for a while$BTC $BTCUSD #bitcoin https://t.co/cHwXAe5Gv2 pic.twitter.com/8DChOzbVln
— CryptoHamster (@CryptoHamsterIO) January 19, 2020
Not to mention, his chart shows that Bitcoin is on the verge of falling out of a rising wedge, which would suggest a deeper correction is on the horizon.
Could It Actually Be Bullish?
While there are the aforementioned bearish arguments, some are leaning bullish.
An analyst going by Thrillmex touted this optimism, posting a tweet in the wake of the dramatic collapse. He showed in his tweet the BTC quickly wicked higher on the four-hour chart after briefly tapping the key supports at $8,463 and $8,577, implying something of a swing failure pattern or a “long liquidity hunt.”
If we are truly bullish this should just be the awaited long liquidity hunt before we continue to push higher.
If we continue to grind down and close below then heliumbot.exe is over.
Will watch new market conditions which will dictate longs/shorts. pic.twitter.com/mWDqFPHT5W
— Cryptoponzi Rampage (@thrillmex) January 19, 2020
While this long bottom wick isn’t indicative of a reversal, the fact that BTC managed to close the candle above the aforementioned supports shows that not all hope is lost for bulls.
Others pointed to the fact that markets cannot go up forever, making this drop potentially just a short-term correction before a move higher yet again.
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