Bitcoin Heads Toward 2018 Supports Amid Breakdown – Price Analysis

  • Short term trend: Falling knife scenario, relief bounce inevitable
  • Long term trend: Downtrend confirmed

It now seems perfectly clear: Bitcoin (BTC) has confirmed a larger downtrend that may take some time to play out. The hopes of a reversal to an uptrend, after the July-October retracement from $14,000, are now baseless. And although it is not, of course, impossible – this being Bitcoin – we should not expect a dramatic reversal for the leading crypto any time soon, as the technicals do not bear this narrative out.

Starting with the weekly chart, which closed yesterday, we first notice that price closed the week far below the key 55 EMA, which served as robust support through October. The EMA “fan” is, in general, clearly collapsing now, with the 13 and 21 EMAs about to cross bearish under the 34.

EMA fan collapsingBTC chart by TradingView

Bitcoin also closed below the neckline of its entire market structure since June, and is now well within the bands of support/resistance that were important during the 2018 bear market.

If we continue on the weekly chart with indicators, we can see that the RSI has broken below the capitulation level from the 2018 bear market. At that time, price quickly fell to almost $3,000. Instead, price has here fallen into the 2018 consolidation zone, generally between $6-7k (blue-grey-blue bands).

Not actually that much sellingBTC chart by TradingView

The histogram here has taken a very sharp arch down for the weekly close. It will be important to see, next week, how this down-arch profile develops: Will it go flat, increase its velocity down, or begin to contract back to the upside? We can also note here, that volume on this breakdown (Gemini exchange) has not been considerable relative to other dramatic price movements during 2019. This fact may help to soften the bearish narrative, suggesting a lack of buyers rather than a rash of sellers.

Finally, finishing with another weekly chart with dominance comparatives, we see Bitcoin’s market dominance continuing to hold at about 67%. But, like Bitcoin's price downtrend, seems to be downtrending and repeated testing of this zone may see a break.

It's time for altcoins?BTC chart by TradingView

Adding to this, we see the “Others” altcoin dominance (mid-cap altcoins and below) continuing to rise, having broken out of the 6% resistance. We should watch this trend, and be on the lookout for a continued shift of capital into altcoins – which is likely if Bitcoin gets itself into a gentle consolidating trend.

Just based on these weekly charts, we can definitely read a general Bitcoin downtrend. But, it’s possible – owing to the weak sell volume – that the worst is already over within that larger downtrend. Support around the $6k area should generally be very robust, having been an extremely dense trading area from 2018. One thing seems certain, though: there won’t be much talk of Bitcoin this year at the various holiday tables (for better or worse).

The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.

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Tim Draper Reveals He Owns Cryptocurrencies Other Than Bitcoin

Michael LaVere
  • American venture capitalist Tim Draper revealed owning more crypto-assets than just bitcoin.
  • Draper expects the value of bitcoin to increase as a result of the Federal Reserve's money-printing tactics. 

American venture capitalist and bitcoin bull Tim Draper claims to own “a lot of other cryptocurrencies” in addition to BTC. 

Speaking in a recent interview with British entrepreneur Rob Moore, Draper claimed that his diversified portfolio in crypto-assets had led to him being “surprisingly up” despite the economic impact of the coronavirus. 

He said, 

You know, when I played Monopoly, I never showed anybody how much money I had so so that you're not gonna get an up or down.

Draper also criticized the U.S. Federal Reserve’s money-printing response to the COVID-19 pandemic, which he said would lead to the dollar crashing in value. He claimed the impact of the falling dollar would drive more value into bitcoin. 

He said, 

There are only 21 million of them and they are going to be more and more valuable as you see governments have less and less.

Draper continued, saying his experience working as a venture capitalist and interviewing entrepreneurs has given him a “pretty good view” of what the future is going to look like. He expects governments to move towards decentralization in a competition for their own citizens. 

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