So far this year, the most important support level for Bitcoin has been USD 5,800. This can easily be elucidated from the graph of Bitcoin’s price on Bitfinex available on Bitcoinwisdom, especially when selecting a time interval of three days. It shows that Bitcoin’s price has crashed into the USD 5,800-6,500 level multiple times in 2018 and bounced off, with USD 5,800 being the absolute support level that Bitcoin has not crossed this year.
The first time Bitcoin’s price rose above USD 5,800 was in October 2017 and besides a brief dip in November 2017, it has not gone this low again. During November and December 2017, Bitcoin saw its biggest rally in history, with the price rapidly accelerating to a peak of USD 20,000. Much of this rally was based in reality, the fundamentals being that Bitcoin is better than fiat since it is cryptographically secured, decentralized, and efficient and cheap to send anywhere in the world. However, the rally had a bubble element that caused the price to go up too quickly.
Bitcoin’s price came crashing back down to Earth and by early February 2018, it hit a local minimum of USD 6,000. This represented a hard crash of 70% in only three months but Bitcoin bounced off the USD 6,000 level and went back up to USD 11,500 by early March.
The price of Bitcoin then crashed again, getting as low as USD 6,500 in early April. Once again, it bounced back up off this support level and was USD 10,000 by early May. It then went into a steady decline that brought it as low as USD 5,800 in late June, perhaps slightly lower than USD 5,800 briefly, but certainly not lower than USD 5,700.
Once again, Bitcoin’s price refracted upwards, to as high as USD 8,500 as speculation about a possible Bitcoin exchange-traded fund (ETF) proliferated in the crypto space. Once this speculation was squashed by a string of rejections by the US Securities and Exchange Commission (SEC) , Bitcoin went into a downtrend again and neared the USD 5,800 level in the middle of August.
As of this writing on 26 August 2018, Bitcoin’s price has bounced upwards from USD 5,800, and is now near USD 6,700. Clearly, USD 5,800 is a critical support level for Bitcoin. If Bitcoin crosses below that by a significant amount, then that means the market has fundamentally shifted but for now, that mark seems to be a solid and obvious support level.
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