It’s 7 pm CAT (Central African Time) and I am in my office trying to finish off a report for a client when I get a Telegram message from a friend:
“WTF is going on with Bitcoin; why is the price falling?”
The message sort of disturbed my evening of work. I had not looked at the crypto market for a few days as things had remained flat for a while. Now we had this sudden movement with nothing prompting it. I had a quick look at the BTC chart is here is what I saw:
One thing I know about any market is that nothing happens without a reason. Several reasons came to mind without any particular clarity. It was time to seek why this was happening. I first thought that some trader’s bot/s had gone haywire triggering others to do the same. Nevertheless, scanning some of the news sites brought other things to light.
Several governments across the planet have said they will begin to tax holders of Bitcoin, the United States and South Africa come to mind. I was intrigued to read about some crypto hodlers selling out their positions to cover taxes owed. Could this be possible, maybe but not enough to trigger a massive sell off except that seller is a really big whale.
Perhaps the most pertinent reason for the sell off was the upcoming Bitcoin Cash hard fork. A hard fork is essentially the splitting of a cryptocurrency into two or more new currencies. At that time, Bitcoin Cash (BCC) was to be split into Bitcoin ABC (core Bitcoin Cash), and Bitcoin SV (Satoshi’s Vision). Bitcoin Cash had been volatile as a currency precisely because of the potential hard fork, which in turn may have affected the crypto market as a whole. We must not forget the civil war going on in the BCC community. This surely had some impact on the sudden drop in the crypto market.
Some of us may argue that the weakness in the US stock markets might have had some impact no matter how small. Maybe investors were just spooked and decided to sell. This argument can be countered.
I think we can safely ignore the pundits going on about BTC $50k, and question where BTC price will go. For starters, BTC broke a key market structure. This was breaking the $6000 mark. As of this blog, the price is at $5251.7 having fallen even lower earlier today. Relative Strength Index (RSI) is also at an oversold level. Oversold levels may mean a bounce back to previous resistance but no one can really tell whether that will happen. If no bounce then it may mean that things are now officially bearish. Another key thing is on the BTC weekly chart. You may notice that the BTC price has broken the 21-day EMA. This may be a signal to indicate a true bearish sentiment.
In a bearish environment what price levels are we talking about? We can give ourselves a rough deduction by using the symmetrical projections methodology. Also known as symmetry or equal drive, this is done by taking an equal measure of previous price highs and projecting them to the lower levels (apologies for not explaining the methodology properly, this will require a separate blog). This gives some idea as to what price may be in the future.
The price estimates we arrived at were $4571 and $3435. Will Bitcoin fall to these levels, maybe. We have all witnessed the volatile nature of Bitcoin with no one really knowing what to expect in the months and years to come, but then again, your guess is as good as mine.
Swap your cryptos here:
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