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Bitcoin (BTCUSD) - Attempts to Consolidate Around $4500 as Doubts Creep In

   

 

BTCUSD - Attempts to Consolidate Around 4500 as Doubts Creep In
 
In the last couple of weeks Bitcoin (BTCUSD) has dropped sharply to its lowest levels for 2018 after having been quite content to trade right below the current key level of $6500. It dropped sharply to around $5500 before consolidating for several days before dropping even further in the last week to below $4300. It has attempted to rally a little in the last couple of days but obviously it is up against immense selling pressure. It now looks some considerable effort will be required to get the Bitcoin price back to within reach of the significant level of $6500.

 

Bitcoin had made several attempts to break higher through the resistance at $6500 however it was sold off on every occasion. In early September Bitcoin fell very sharply from a one month high near $7500 and quickly settled under $6500. The $6500 level has firmly established itself as a level of significance however this is obviously now a considerable distance away and new significant levels will need to be identified.

In the second half of July, BTCUSD enjoyed a strong surge higher moving through the key $6500 level and to the two month high. May and June saw Bitcoin fall strongly losing almost 40% of its value in that short period, from the peak near $10000 in early May to trading levels just below $6500. Throughout April, BTCUSD again rallied well off support at $6500 to approaching $10000, however these gains have been few and far between in 2018.

As Bitcoin celebrates its 10th anniversary, some believe there isn’t too much to celebrate now.Many believe that the mania and excitement that drove the price up so strongly in late 2017 is starting to unravel.Of course its rapid rise last year garnered a tremendous amount of interest.It’s price increase gave it sudden pop-culture status and invited in retail investors thanks to fear of missing out (FOMO).Many were eager to dismiss the currency as something fake or something that was only used criminal purposes, however due to the fact that the price went up so quickly, everyone at some point had no choice but to investigate further.The problem now is that these price falls can easily be exacerbated and extended.When prices fall so quickly, bitcoin miners sell coins to cover costs, institutions become less keen to enter and regulators find their scepticism vindicated. The previous FOMO factor turns into a mass exodus.It is widely expected that prices will fall further before stabilising due to the negative feedback loop in the cryptocurrency world.You may even have some crypto exchanges closing further casting concerns over the currency.

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The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.

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