A steep drop of $100 on Sunday evening heralded a mini dive down below the $3,400 line yesterday afternoon. With some degree of fight, the bears and bulls of BTC have been engaged in a digital tug-of-war either side of $3,400. After regularly falling under this mark, it still managed to claw back up for the hourly closes. This tells us plenty of crucial things about the market.
Firstly, to be able to cling on at the hourly closes, it suggests there is lots of support still in the pot for BTC and plenty of people are desperate to keep it above $3,000.
On the other hand, the fact it continues to get pushed down betrays an equally keen movement to shove it over a cliff in order to profit from a capitulation.
It also shows us that the bottom of this market may not be as deep as some naysayers would have us believe.
Figures of $1,800 or even $120 are often prophesised.
$1,800 would indeed be a serious fall, and a believable low to drop to, but something like $120 would come with an official ‘catastrophe’ stamp.
We came into the new year running a steady line of $3,600 before stepping down to $3,500, which held until the weekend where another step took us to $3,400.
Questions remain about whether or not there’s enough volume to sustain support for sideways movement, and there is very little indication of any clue towards upward movement.
This morning, things took an ugly turn early on with another drop below $3,400 that couldn’t recover.
A gutsy fightback was quickly swatted away as BTC tumbled between $3,360 and £3,380 to find what might be the current level while a battered and bruised bitcoin takes a breather.
And it is not alone, either. Ethereum, Ripple, Bitcoin Cash, Litecoin – the whole lot are covered in red arrows all pointing south.
The intelligent guess here would be to revert to the thinning ice analogy mentioned earlier.
Cracks are already starting to show, but the true point where the ice can still just about take the weight of the bear would be something like $3,250.
This would be considered a safe line from which bitcoin could still build a recovery if traders wanted it to.
However, any downward movement off that would almost certainly open up the trapdoors for the capitulation that seems an almost inevitable conclusion to this latest curious crypto cycle.
Just like the thinning ice, it is almost impossible to predict when that moment will come, but when it does the likelihood is that bitcoin will bottom at $1,800 before rebooting itself for a mass buy-in.