The Bitcoin market is never boring and this past week didn’t disappoint with the flash crash to $380. The price has since rebounded and Bitcoin is currently trading at $414. One of the main factors which undeniably contributed to the price slump is Bitcoin’s transaction backlog which occurred around March 3rd.
Last week the network got flooded with spam transaction, which effectively increased the fee required to confirm transactions in a timely manner. As a result, many services that accepted Bitcoin received a flood of customer complaints that their payments weren’t going through. This caused many merchants to remove Bitcoin as a payment options from their store, furthermore an article published on The Verge titled “Bitcoin’s nightmare scenario has come to pass” received an extraordinary amount of shares which also attributed to the weekend selloff.
— The Verge (@verge) March 5, 2016
Bitcoin proved once again to be quite resilient as the market rebounded after the sharp selloff, the next hurdle up is the resistance line at $420 which held for over a week before the crash. The quick rebound tells us that the dumping is over for now, furthermore the halvening of the block reward in a few months suggests a bullish case for the market. However, as major media outlets continue to portray Bitcoin and Blockchain in general in a negative manner, the Bitcoin and other cryptocurrency markets will undoubtedly feel the effect of the negative attention.
Some traders such as NorthStreet from tradingview, are suggesting to short Bitcoin as far as $345 due to the incoming Death Cross.
“A death cross occurs when the short-term moving average of a security or an index pierces below the long-term trend” –cnbc
A Death Cross suggests a bearish market and further price drop. The chart provided by NorthStreet shows that the 50 MA (Moving Average) is going to pierce below the 200 MA.
If the price doesn’t continue to rise, the short term moving average will pierce through the long term 200 day moving average creating the perfect recipe for another crash. It is important to keep the possible upcoming formation of the Death Cross in mind when making trades.
Taking a look on reddit, yolotrades from BitcoinMarkets reinforces the idea that despite the recent crash the market is still in a bullish scenario. He provided the following chart plotted using a log scales:
Here is a zoomed up version of the chart:
“We’re pretty much right in the middle of the triangle, but that rejection was pretty strong. Not only did it struggle nearly the whole way down, but it’s been less than a week and we’ve made up 75%+ of the dip. This feels incredibly bullish to me, and I have a feeling that we will be testing / breaking through the triangle (upwards) very soon.” – yolotrades
Taking a look at the chart one can infer that the first triangle will meet in 3 weeks while the second triangle will meet in around 4 weeks. This brings our “doomsday” to right around April 20th, keep in mind though that when the triangle resolves it won’t be a quiet move since it has been building up since November.
The Bitcoin market is facing both positive and negative pressure from all sorts of players. The upcoming halvening suggests a bullish market ahead, but the plot thickens with the blocksize debate, the possibility of the formation of the death cross, and the upcoming resolution of a 5 month long triangle.
If you liked this article follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.