Low Volatility Just Went Out The Window
The volatility in Bitcoin was the lowest sense April. Bitcoin spent most of Sept trading between $10k and $11k. Well, that all went out the window Tuesday afternoon. Yesterday afternoon, Bitcoin dropped over $1500 in less than two hours. But what was the catalyst.
CNBC contributor Brian Kelly and Fast Money commenter said $9000 served as support, but once that was broken, all bets were off. Joe DiPasquale of BitBull Capital said prices collapsed because it was a buy the room, sell the news in terms of the Bakkt’s bitcoin futures which launched Sunday evening. While others mentioned it was the decline in the hash rate that caused the sell-off.
And my boy Tom Lee of Fundstat had this contrarian viewpoint to say.
co-founder Tom Lee believes that there is a correlation between Bitcoin and the US stocksFundstrat boss Tom Lee has finally weighed in on Bitcoin’s massive price drop that sent shockwaves around the cryptocurrency community.
In a recent tweet, Lee reiterates his earlier prediction that BTC will hit a new ATH, but only if the US equities market achieves a similar feat.
While Bitcoin is generally considered to be an uncorrelated asset, the fact that its price tanked right after the stock market adds legitimacy to Lee’s words.
Why did price stop where it stopped? Have you ever heard of confluence in trading? According to Investopedia, confluence is the combination of multiple strategies and ideas into one complete strategy. Confluence occurs when two separate ideas/strategies are used together to form an investment strategy that is in line with an investor's risk profile and goals.
In the case of Bitcoin, at the $8000 level, there is a major support/resistance line,
and that’s where one can find the 200 simple moving average. The 200 moving average is considered a key indicator by traders for determining the overall long-term trend. 200 MA also used as major support when price is above the 200 MA or resistance when price is below the 200 MA level.
And might I added, there was demand at $8100.
Alright, so where do we go from here? I have heard $7500 and $6500. And if you are Peter Schiff, a Gold Bug, author of Crash Proof and CEO and chief global strategist of Euro Pacific Capital Inc., who said Bitcoin will never see $50k, he thinks Bitcoin is headed to $4000.
But before any of that happens, price will have to deal with the daily demand at $6950 as well.
So the $1MM question is, is this just a pullback before the continuation higher or 2018 all over again, what do you think?
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Looking like a nice breakout from the triangle.
If anyone want to short BTC i would wait for a pullback and see the reaction at this point.
If we go down i think we will go to my trigger at 4300$.
Agree, price usually retests the breakout, so we shall see.
Do we know what caused the massive hashrate drop? That would have been a concern for many if it was a potential network attack.
Although the hashrate was at all time highs, some say they weren't as profitable and went offline, but that's just a theory.
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I would love to see mcaffee cut his dick, but I would also love to see btc at 1 million after a year. My crystal ball though says its just a pullback.So, I guess it will either go up or down.
I tend to agree with Tom Lee, I think Btc will follow the equity markets...until they don't.