Two days ago on June 12th, Bitcoin’s price crashed $500 from a high of $2980 to a low of $2480 on Bitstamp. Since then, the price climbed over 10% and is trading at $2754 at the time of writing. This article will go over potential factors that might have caused the crash, and try to explain Bitcoin’s recent recovery.
As discussed in our previous article regarding the crash, OkCoin’s liquidation of long positions was the catalyst for the panic sell. As the contracts executed, they created massive sell pressure on the market. Combine that with Bitcoin’s price trading in uncharted territory and you get a 17% drop in 12 hours.
On the upside, Bitcoin’s price has recovered over 10% since then. The $2700 level has been serving as solid support for the past 24 hours as the market is deciding its next move.
Taking a look on Tradingview, it looks like many traders believe now is a good time to short Bitcoin. For example, DLavrov from Tradingview suggests that Bitcoin’s price may drop to around $2500 according to Ichimoku signals. Those are technical indicators which help define support and resistance zones based on moving averages. He provides the following chart explaining his reasoning:
Chart: Tradingview
“We can trade Bitcoin based on Ichimoku signals. Price reverses from the kumo (clouds) and RSI confirms it. DMI shows trend market conditions and allows trading. Entry level for short trades can be below 2680.00 with stop above 2800 level. Profit target is near 2500 level.” –@LavrovFx
For those of you who are unfamiliar with a DMI (Directional Movement Index). Its purposes is to define whether or not a trend is present. Looking at the above chart’s DMI, we can see that the ADX (blue) was high, signaling that a trend was forming. However, looking at a more updated chart we can see that the DMI has retracted significantly, meaning the potential for a downtrend isn’t as high as before.
On the upside, ew-forecast suggests that Bitcoin is trading in its final Elliot wave, and that the price will see much more highs. He presents the following chart for his Bitcoin price movement prediction:
Chart: Tradingview
“Bitcoin is unfolding an impulsive pattern to the upside, which means that red wave 4 correction has ended around the 1800 mark. We now see a five wave impulsive movement which unfolded in black wave 3 and found a top near the 3000 level. Wave 3 can also be completed and recent pullback could represent black wave 4 correction. That said, if wave 4 correction is completed then we can expect a new recovery to follow into the final black wave 5.” –@ewforecast
Block Size Debate Heats Up
Moving away from technical predictions, and switching our focus to upcoming events that might influence Bitcoin’s price, the block size debate is getting heated once again. Recently, mining giant Bitmain released a blog post describing their contingency plan for the UASF aka BIP148. Bitmain will ultimately mine their own fork of Bitcoin once UASF activates on Aug. 1st. Reddit user theflar summarized the announcement best: “It’s cartoon-level supervillainery.”
One can only speculate about how these news may affect Bitcoin’s price in the coming days. One thing is for certain, Bitmain hard forking away from core shows that miners are still not in agreement with the rest of the Bitcoin user base. This announcement definitely puts meaning to “Fork your mother if you want to Fork.”
— Javier (@javisobr) March 23, 2017
Disclaimer: This is not trading advice. If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
