Bitcoin $BTCUSD is consolidating under 20K, and has been retreating in the previous couple of sessions. It was in a wedge in the previous session, but price accelerated downwards and the correction has now evolved into more of a falling channel.
Correction Picks up Pace:
- As noted, the correction has accelerated during the 12/20 session, and broken the support around 16500 discussed in the previous updat.
- I think the next level where we will see strong buyers will be around the 15000-15300 area.
- Below that, the 14000-14300 area will be the next, and most critical support area. Above it, the long-term pressure is still on 20K. But that bias is killed if price falls below 14000.
- At this point, a break above 18000 would likely be part of a bull run to test 20K again. In this scenario, I would not rely on 20K holding.
China + Jamie:
- Patterns don't hold too long, but BTCUSD has had a pattern of shorter and shorter consolidation periods.
- We have rarely seen more than a week of persistent decline expect in September, when China banned ICOs and Jamie Dimon claimed bitcoin is a scam, a statement he later walked back on because JPMorgan Chase definitely invested in Bitcoin.
- I would call this one of the major hits bitcoin has taken this year. That dip was from 5000 to 3000 (40%) in a span of about 2 weeks.
Fork + Flippening:
- In November, we saw another 20% dip (from 8000 to 6000) ahead of a "hard fork", which ended up being scrapped. This means bitcoin "fork" into a faster and cheaper, more scalable version.
- Instead, the developers are working on the lightning network to address the scalability issue.
- Meanwhile, this gave Bitcoin Cash an opening because it claimed to be the scalable and thus commercial version of bitcoin.
- There was some "fear" or "imagination" that Bitcoin Cash would replace Bitcoin. This process came to be known as the "flippening".
- All this drama pushed bitcoin down only 4 days, though it was a steep 20% drop.
Futures + Flippening Round 2?
- Recently in December, the CME and CBOE started to offer bitcoin futures.
- During the 12/19 session, Coinbase added Bitcoin Cash (originally Bitcoin, Litecoin, and Ethereum) to its offerings.
- Trading halted immediately as Price of Bitcoin Cash flash-melted up from around $2000 on Monday (12/18) to almost $10,000 before stabilizing around $3500-$4000.
- Coinbase had to stop and relaunch BCH the next day (12/20).
- Bitcoin might be going through another transition as it becomes mainstream both as a topic of conversation and as a legitimate alternative investment.
- If so, I would say, expect no more than another week of this correction/consolidation before Bitcoin pushes again into the New Year.