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- After Bitcoin had to record a strong price collapse on Wednesday, a brief recovery in the cryptocurrency market is currently evident.
- However, critical turning points are imminent for Bitcoin. Both the “death cross” and the low trading volume indicate a bearish trend.
The cryptocurrency market is currently showing a slight recovery after the Bitcoin price suffered a crash of almost 10% on Wednesday. As CNF reported, the sudden price drop was triggered by several factors, with the cash-backed Bitcoin futures on the Chicago Mercantile Exchange (CME) and a whale transaction on the Bitstamp exchange being seen as triggers for a subsequent chain reaction.
As a result, the market capitalization of the entire cryptocurrency market has fallen to around 203 billion US dollars. Currently, however, the cryptocurrency market is showing a phase of recovery. According to data from Coinmarketcap, total market capitalisation has risen to over USD 206 billion. The Bitcoin price was able to stabilize at least temporarily above 7,400 USD and is (at the time of writing) at 7,468 USD (+0.37%). Among the top 10 cryptocurrencies by market capitalization, Bitcoin Cash (+3.0%), Bitcoin SV (+15.5%) and Binance Coin (+3.3%) record the largest gains over the last 24 hours.
Critical turning points
As the technical analysis indicates and many analysts have noted, the Bitcoin price is at a critical point, making a further correction of the price possible. As reported by CNF, the technical chart formation of the “Death Cross” will take place in a few days, unless the BTC price rises sharply.
This will happen when the 50-day moving average falls below the 200-day moving average. In traditional chart analysis this formation is referred to as the “Death Cross” and is a strong indicator and confirmation of a bearish trend. For Bitcoin, the death cross had last appeared in April 2019 and, contrary to traditional technical analysis, triggered a rally lasting months, culminating in a price near USD 14,000.
Technical analyst Josh Rager told his 59,800 followers on Twitter that BTC’s next support level is now around $7,120. Due to the low volume and historical precedent, Rager expects BTC to fall further in the short term.
I think we can have a nice strong upswing between about $6,000 and about $6,500. I think we will go further down. Why do I think we won’t go sideways and go up again? That’s because you usually don’t go sideways for almost a month just to cut an extra 9-10% in one day.
If support doesn’t hold at $7,120, Rager expects Bitcoin to fall to just over 6,000, where there will be more buying pressure.
https://twitter.com/Josh_Rager/status/1187357262903422976
Other analysts believe that Bitcoin’s recent correction is nothing more than a “long squeeze” where investors sell their long positions partially in a falling market to minimize their losses. If this is the case, there is a chance that Bitcoin will make profits again in the long run.
An important factor, however, will be the trading volume, which is currently at a very low level. According to Bitwise tracking data, the current volume is around USD 510 million on the verified exchanges. Compared to 3 billion dollars in daily transactions during the peak of the Bitcoin boom, this shows a rather bearish mood at the moment.
Mike Novogratz predicts falling BTC price
Mike Novogratz, CEO of crypto investment firm Galaxy Digital, said during yesterday’s interview with CNBC Squawk Box that he expects Bitcoin to fall further in the coming days. He claimed that there will be further selling pressure causing Bitcoin to drop by at least 13% to USD 6,500. Novogratz added that there must be a “new energy” to lift this move, which will bring Bitcoin back over $8,000.
I hope it holds here. 6,500 USD would be the next support…. I think you have to come back first by $8,200, and when it breaks through the 8,200 USD mark, we’re back at 8,000-10,000 USD. It will need new energy to really make the big step.
Novogratz attributes the current downtrend to the numerous negative news of recent days. Novogratz sees in particular the decision of the U.S. Securities and Exchange Commission (SEC) to prevent Telegram from launching its GRAM token and the hearing of Facebook CEO Mark Zuckerberg in the US Congress as important factors for the current market trend. Furthermore, according to Novogratz, institutional investors have still not intensively explored the crypto market.
