Today was another one of those volatile, hectic trading days where we saw Bitcoin bulls losing their fight for the key resistance $10k level.
In a sudden and heavy drop, the Bitcoin price dropped by more than 10% in just an hour. This happens after a few attempts at a break out toward the $10000 got rejected. Every time the sellers pressed hard and succeeded in suppressing the price below that key level.
Why is the $10,000 so important?
Since the start of the bear market in 2018, we have been ranging below the $10,000 with only one exception. In June 2019 we briefly went into the $13k level but that got a rejection and we hovered around the $10k level for a few months until we dived below in late September and have been unable to overcome this since. We had three attempts – one in October 2019, another one in February this year and a third one just a few weeks ago, where we touched $10,300 but that proved a strong resistance and yet again we rejected, even though this time around we had the halving euphoria and a much-needed market sentiment to push us further up at last. This third rejection is quite significant, for it often signals a trend reversal. We did put up a good fight to reclaim the $10k challenge, but until we manage to stay above this level for some time, we will not see Bitcoin’s next bull run come in full force.
For now the market does not look bullish but we still have a chance at reclaiming and pushing further. However, it will make more sense to expect a retest of the support which is around $8900-$8800 levels. If that doesn’t hold, then we can look out for a short term bear trend where we could even drop back to the mid $7k or even the higher $6k range, although I don’t really expect to go as low just yet. Seems the buyers are more aggressive once we drop below $9k and this might save us from another major crash.
What about the AltSeason?
As usual, a price drop of Bitcoin drags the rest of the crypto market too and almost all coins experienced around the same price drops. That includes all the coins from the Coinbase list which I posted about yesterday, so this can be good for some. The best time to accumulate is when there’s blood on the streets (figuratively speaking) and right now all markets are bleeding, so it’s surely an opportunity. I am eyeing a few alts but I’ve positioned my orders even lower, so let’s see what will happen. The Altseason is still ongoing and it’s most powerful when Bitcoin is consolidating sideways, so if we don’t experience any further price dips or jumps in Bitcoin, we can expect the alts to be boomng. We ought to keep a close eye on this and remember that when trading Alts, it’s always important to monitor what Bitcoin does. Most of the alts are correlated with BTC to a great extend, so they drop when Bitcoin makes a sharp move – either up or down, they drop nevertheless.
Is there hope for Bitcoin?
Yes, the recovery from $9100 to $9350 was fast and promising but this still doesn’t indicate the end of this bear attack. Every rejection is followed by a retest of the support and if we stay above the $9000 support, we still have a chance for taking another hit at the bears. However, we also have to keep an eye on the S&P 500 and monitor its performance. As I reported back in March, Bitcoin and the S&P 500 became correlated in the beginning of the recent virus pandemic and have been moving together ever since. The correlation is not perfect, but it’s pretty strong, and it still shows no sign of going away. Last night, both markets were falling heavily, moving in lockstep once again, so we really ought to watch out for this pairing.
If you want to know where Bitcoin’s heading next, you should watch the stock market.
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