- Bitcoin’s five-day drop has caused much debate over where it stands now
- The failure to stay over $12,000 has given us a new boss level to overcome
- The bull run may be postponed until November-December
Bitcoin, and the entire cryptocurrency market, has endured a severe correction that has ruined many an investor’s portfolio. Bitcoin has crashed from $12,000 to $9,850 in the space of three days, while the alt market has suffered even more, and the question on everyone’s lips now however is whether the bull market is over.
Bitcoin Crash Creates New Boss Level
Bitcoin’s crash has been ugly, and the lack of a meaningful bounce has brought many bears out of the woods. From the weekly perspective it is tempting to think that this is another local top and we could be in for a longer term recovery or deeper correction:
What we know for sure is that Bitcoin’s inability to get over $12,000 has left us with a new boss level that needs taking out before we can be confident that an assault on yearly and all time highs can resume, but that doesn’t mean that all is lost.
Temporarily at least, Bitcoin has turned the $10,100 level that acted as resistance in February and May-July, but is this just a stopping point en route to more misery, or is it the platform from which we will stage a quick recovery?
Searching for clues of crypto Twitter gives a mixed bag of responses, with some feeling that we are experiencing a typical Bitcoin bull market pull back and others feeling that the good times are gone – at least for now:
Somehow looks even worse than when I left.
I’ll be looking for bounces to add to shorts but honestly, I’m not even sure we get those.
My trade & my idea will be invalidated if we get a significant daily close above $11200.
Until then I’m going to be a full-blown beartard. pic.twitter.com/l3IIt4KMNZ
— DonAlt (@CryptoDonAlt) September 6, 2020
After an entire YEAR and several attempts we finally managed to close above $10k…
— HornHairs 🌊 (@CryptoHornHairs) September 6, 2020
The bearish argument suggests that because Bitcoin has failed to show serious signs of bullishness since bottoming out at $9,845, there is much more likelihood of a further collapse. Any upward momentum has been killed since the drop, leading to a potential descending triangle pattern developing:
These patterns resolve downwards, and if Bitcoin were to drop further from here then the first support level can be found in the $9,500-$9,800 region, with further support to be found at $8,700-$9,000. As we can see, the only situation we need to fear in the short to medium term is a confirmed close under the rend line we broke through in July:
Bulls Eye $10,600 and Beyond
Bulls argue that the fact that the $10,000 level is holding is in fact good news, and that a period of further consolidation around this piece point would offer a platform to reverse the losses of the past three days. If we can escape the descending triangle while remaining above $9,950 then we may be in a position to look for long positions, with $10,600 and $11,000 being the targets.
However, it would be wise to consider shorting these targets if we reach them given that the upward structure we began in March has now been conclusively broken. This means that, unless there is serious desire to get through these levels of resistance, there is a high probability that Bitcoin will reject at one of these levels and return to test the $10,000 region again. Only once a proper bottom structure has been formed can we consider a resumption of the bull trend.
Bull Run For Christmas?
It seems sensible to suggest then that the bull run has been postponed rather than cancelled, and that we may well be looking at November-December for a proper bull run to take place. Of course, the U.S. elections are taking place in November which will have an impact on the stock markets and therefore Bitcoin, given its correlation with traditional markets these days.