After breaking a technical and psychological support at $300, Bitcoin prices plunged another 10% during the last two days to intervene with the long term support at $260 – a high set by the previous rally in April 2013. Ever since the start of this bear market, TA pundits and chart readers have been calling the penetration of the $260 area to be a sign of an impending doom which may lead to sub $150 prices. It is now clear that market is infiltrating in a very dangerous zone receptive of real panic among traders. Market participants have been desperately anticipating a sign of trend reversal but is this final capitulation? No one knows for sure.
All About Right Timing
Prices were hovering around $310-320 range at the beginning of the week 12/29. It’s important to notice that during this time most parts of the world were celebrating New Years and spending time with family except – China. While every other major financial market has no trading activity during the weekend, Bitcoin is famous for its notorious drops during the weekend or at least since the last 13 months.
Chinese traders knew they couldn’t drop the prices and instill a capitulation among Western traders until holidays festivities were over. This becomes evident with the sideways movement through the week and then a sudden 13% drop on 1/3 at the start of 2015. With markets closing around $280 on BitStamp and touching a low of $277, charts indicated a further drop. However, trading activity once again resume to sideways movements at the beginning of Western session on 1/4 with markets trading between $278 to $289 on BitStamp. As I write this post from Asia, the West is waking up. During the last three hours, while the West was tucked in their beds, Bitcoin markets lost another 9% during the last three hours. Western traders will be watching a big drop of 9% from $281 to $255 and this will lead towards the final bloodshed.
Has there been any negative news during this time period? No. Is there anything wrong with the underlying Bitcoin protocol? Perhaps a recently discovered security flaw? No. So, what possible reason can be associated with this sudden drop into the high 200s? It’s all about timing. Yes, one could argue about the supply side of Bitcoin and how there isn’t enough demand. But, the end of Bear markets are vicious in nature. Every market participant must feel a desire to cut losses and SELL. There is blood on the street. Who do you think is buying? If you liked this article follow us on twitter @btc_feed