Bitcoin does it again with a ‘surprise’ move to the downside.
Earlier this week the picture was bullish, with bitcoin breaking through the $4k barrier once again and – critically – this time appearing to consolidate there. Yesterday, the price inched higher, touching $4,055 (Bitstamp), suggesting that BTC might be about to make a break for the resistance zone just above, at $4,100–$4,200. That would have been game changing.
It was not to be. As has happened so many times before, we saw a sudden and hard move downwards. This was another high-volume dump, back below $4k, going as low as support around the $3,900 zone.
In terms of major support and resistance levels in play, this actually changes relatively little. There is still that significant resistance zone at $4,200. Should bitcoin break that, it would be a higher high and that would be one signal that the bear market could be over. (It would not be conclusive, but since we have not yet had a higher high, it is required and would be a positive development.)
Meanwhile, BTC is still trading above the 50-day and 100-day moving averages. We also have a rising support line that started with the low of 8 February. That currently stands at around $3,900. $4k stands as psychological resistance and now, as the rough area of the last high. Price is being squeezed, with only a ~$100 band to play in – and getting smaller all the time. Once again, it’s decision time.
Meanwhile, we have some good and bad news from the wider Bitcoin ecosphere. This week we have had the news that exchanges are faking trading volumes by an average of 800%. Just a handful post legitimate volumes, while others exaggerate activity by up to 100x.
More positively, hashrate is rising back towards its all-time high again, after a slump at the end of last year when mining became unprofitable for smaller rig owners.
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