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Bitcoin's (BTCUSD) Growing Pains: China + Jamie + Fork + Flippening + Futures

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. 

Bitcoin Sheds 50% Value in a Falling Knife

Stalking Bitcoin's Consolidation Structure Under 20K