Bitcoin price crashed drastically during the early hours of Thursday. In just one hour, Bitcoin dropped over 5% of its gains, falling below $6,100. Thereafter, the price retraced close to $6,300. What can we expect? Will the bears push the price further down?
The price of cryptocurrencies declined sharply overnight. The price of Bitcoin, Ethereum, Ripple, and Litecoin all crashed by more than 5%. The number one digital currency, Bitcoin fell by 400 points while Ethereum, the second largest coin dropped by more than 22 points.
The market capitalization of cryptocurrencies tracked by CoinMarketCap fell to $185 billion, which was the massive sell-off in recent times.
Bitcoin Price Crash: What Happened?
Trouble in the market began last week after ADP released their jobs report for the USA. The figures released reveal that the private sector had increased gains. The confirmation was made on Friday when the government data indicated that the rate of unemployment had dropped to 3.7%.
As a result, a massive sell-off started by the US treasuries as traders started getting apprehensive about rising interest rates. In addition, the New York Times wrote Yesterday, that if the trade war persists, China could withdraw from buying US treasuries.
The decline of the crypto market somewhat erased the thinking that digital currencies could be used as a safe haven in times of increased risks. In the past, crypto enthusiasts have called Bitcoin a digital gold which traders rush to when risks increase.
Yesterday, Hurun released its list of the wealthiest people in China. The list showed for the first time, that eight people were investors in the cryptocurrencies industry. Some of them were even the founders of Bitmain, Binance, and OkCoin.
Bitcoin Critics Camp Grows
Moving forward, it seems that the camp of Bitcoin critics is growing. The American Association of Retired Persons published its glossary of Wall Street buzzwords with the following definition for Bitcoin.
Bitcoin — A bunch of computer code that a bunch of criminals, idealists, and speculators agree is worth ‘real’ money. Sadly, its real-money value swings widely, making it impractical except for criminals, idealists, and speculators.
This definition would definitely sound appealing to American Economist, Nouriel Roubini. Roubini, better known as “Dr. Doom” said in a recent tweet that cryptocurrencies and blockchain are worse than North Korea. He wrote:
Decentralization in crypto is a myth. It is a system more centralized than North Korea: miners are centralized, exchanges are centralized, developers are centralized dictators (Buterin is “dictator for life”) & the Gini inequality coefficient of Bitcoin is worse than North Korea.
Nevertheless, the Twitter community responded, mocking his statement with sarcasm, which is hardly surprising.
Bitcoin Price Technical Analysis
Looking at the technical picture, Bitcoin price seemed to have made an upside break from the long-term triangle consolidation but failed through a short-term triangle support. This performance brought the price back to the longer-term zone as the bulls seem to be defending this area for the time being.
However, there is a possibility that Bitcoin price could hit $7,000 or higher if a breakout happens. But, if the bulls fail to sustain the momentum, the bears could drag the price down further toward $6,350 and $6100.
Currently, the 100 SMA is above the longer-term 200 SMA which suggest that the path of least resistance is to the upside.
Stochastic is also turning higher which indicates that buyers are trying to regain control. Nevertheless, Relative Strenght Index (RSI) shows that there is room to free fall before reaching oversold levels. That means the bears could continue winning for a bit longer.
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