Why some people believe bitcoin has faced the bottom.?
Bitcoin closed the weekend above £5.8k ($8.3k). As shared last Friday, we believed this was a key indicator to a bullish week ahead, yet that wasn’t enough for some traders. Around 02:10 UTC, a large volume of sell orders pushed the price down almost 4% in 5 minutes.
It seems that the more people want to believe in something, the more incentives there are to make that reality an illusion. Let’s recall last week, as an example; when almost everyone felt shorting bitcoin was the path to obvious profits. Also, as we write this newsletter, bitcoin is continuing to retest £5.6k ($8.0k).
It’s important to look at an earlier fractal we had shared in the ides of March. Price action isn’t providing any further clues as to whether or not 2018 looks more like 2013 or 2014, however, since last Thursday, the bullish sentiment seems to have experienced a revival. Some even referred to this as the ‘return of the volume’. Conversely, Fundstrat’s Tom Lee argues that a comparison as such is not indicative of such events. The key thing to look out for is how long it takes to return to the levels seen before the bull run. It seems bitcoin has retraced enough already.
The previous section could be the product of bias amongst vocal analysts. Let’s be the devil’s advocate and focus on the underlying narrative behind the the sentiment shift: U.S. tax day. The deadline for U.S. citizens to pay their taxes is tomorrow. Thus, if bearish events have been priced in, shouldn’t bullish ones be too?
Popular analysts have made well-reasoned arguments signifying that the 2018 downtrend was caused by a Japanese and U.S. sell-off, i.e. an outflow of crypto profits into fiat to ensure these tax liabilities are met. What if that was not even a major driver of the bearish market? This is a counter-argument that’s gaining strength over the past few days.
There’s a new report claiming that ‘hardly anyone is paying taxes on their bitcoin gains as the filing deadline nears’. To supplement the bearish sentiment, see the last four times bitcoin’s price was at today’s Bollinger Band’s level — a popular indicator that consists of moving averages that define possible lows and highs. This can incentivise more buyers to wait for a pull back to buy back their cryptoassets at a lower price!
Despite a stagnant weekend — the total market cap stalled at £228 million ($325 million) — some alts showcased significant profits, e.g. XLM and NEM. Though these were technical trades, you can check for announcements based on fundamentals, which have previously stimulated price action for other projects here.
If you are trying to catch the widely-announced Verge announcement — set for tomorrow — make sure you read this: Exit scam? The next Bitconnect? Price is down because traders are already pricing in the probable pump and dump.
Hurry up — the last time the team behind the TokenEconomy weekly newsletter announced a London meet-up it sold-out at lightning speed. Yesterday’s edition was delayed and was just sent out an hour ago — here’s your chance for a great breakfast this Thursday!
Did you know investors aged 50+ were responsible for the majority of crypto investments in South Korea? Check for more information here — heads up, some will need a Google Translator!
Did you know that ‘institutional order flow’ behaviour, which is typically seen in forex markets is starting to become prevalent in cryptoassets? Learn all about it here.