Bitcoin (BTC/USD) slid sharply this week, breaking a month of quiet price action. Price fell to fresh lows on the year and tagged $5200 before stabilizing for now around $5500 as of early 11/16 (Friday) US session.
What’s behind the current dip?
There can be a lot of things, but I would attribute it mainly to the build up of tension in October as the eventual amplifier and the BCH fork event as a trigger.
October Lull: Price action went into a narrow range in September and remained tight going throughout October and going into November. The longer price action remains in a narrow range, the stronger the breakout will likely be. In fact, We are probably not done with the capitulation yet, because price has been coiling above $6000 since the beginning of the year. Now it is time to uncoil and capitulate.
Bitcoin Cash Hard Fork:
There are a lot of coverage out there on this "war” caused by a split in the BCH community one led by Roger Ver and the other by Craig Wright.
The tweet above could be part of the reason BTC initially moved lower, but it is likely the rest of market traded it down further. As noted before, the October doldrums was setting up for a big move, so a little nudge would be able to push price in one direction, especially when it breaks a key support in the $5800-$6000 area.
BTCUSD Daily Chart
Not only should we consider the tension built up in October, we should also consider the pressure on $6000 throughout the year.
The daily chart shows that price action has been hammering on this support for months.
Now that it finally cracked, we should expect tests of lower support levels.
I think the current bearish breakout opens up the $3000 area, which was a support/resistance pivot in 2017.
This bearish outlook would gain further traction if we see price rebound and turn the previous support around $5800-$6000 into resistance.