The decision by many to wait and watch from yesterday’s precarious position proved to be the right call in the end, as Bitcoin finally beat back a retreat from levels above USD 10,000 to stay below this psychological milestone for most of the day.
As feared, it was when North American markets finally awoke for Tuesday trading that the slide down the slippery slope of retracement happened. At around 3:50 pm UTC, Bitcoin almost immediately shed USD 500, before ultimately losing USD 1,000 in just over an hour. The remainder of American trading saw further pullbacks and sell offs pile the pressure on Bitcoin, causing a daily low of USD 9,236 in late evening (CoinDesk).
Asian traders contributed to that low when they took over, but by late afternoon trading and now with London fully on board, price has somewhat stabilized to more respectable levels, though the situation is still flimsy with a trading price of USD 9,552 at 8:40 am UTC. Bitcoin is now holding on to a market capitalization of USD 170 billion, while the overall crypto market cap is just tapering off at USD 258 billion (CoinMarketCap).
The bears will claim victory if price does not touch USD 10,000 for 24 hours straight, so the world will be watching to see if Europe will want to prevent this, although American traders could also have a quick say in this, if there is appetite for a mid-week rally.
However the hopes for the day, an 11% draw back for Bitcoin has sent shudders throughout the rest of crypto, with altcoins feeling the heat intensify. EOS, TRON, Litecoin and Ethereum are the biggest losers in the Top 10 (by market cap) while even privacy coins like Monero and DASH are shedding chunks of value.
In summary, all the gains made since mid-June has effectively been wiped out. The bulls, while likely to be licking wounds all week, will point out, however, that we are still slightly up from where the market was exactly a month ago. And the fact that the retracement has been violent yet measured, will to them mean that Bitcoin is getting more resistance to pullbacks and the underlying fundamental strengths are propping up the world’s most-recognized digital asset, to ensure that it marches on towards its old all-time highs.
Zooming out on the technical charts on a monthly timeframe certainly shows that even for the medium term, the trend is just a shade off from being positive, while at least a sideways trend is the worst observation to make. BitcoinNews.com technical analysis also shows that Bitcoin buying mood has been positive even in the face of sustained selling attacks, and the USD 9,400-9,000 test did indeed happen, but has so far held.
Traders are now beginning to feel the screws tighten, and some are warning that the worse could yet arrive. According to self-professed classical charting principles trader Peter Brandt, this recent turn of events and the “loud and clear” signs of total market cap could result in a parabolic correction of up to 80%, with most of it in altcoins.
Of course, these types of corrections, and in fact, even worse ones, have frequently been a feature pre-empting huge rallies, such as the ones in 2017 and 2016, where Bitcoin price actually fell by 80% in both years. Crypto trader Crypto Monk responded to Brandt with these charts, which led to Brandt himself sharing a similar pre-parabola correction in 2014.
My favorite one is the great 80% correction in 2016. pic.twitter.com/w10JFgnogO
— The Crypto Monk ⛩ (@thecryptomonk) July 16, 2019
Bitcoin went from the basements and black markets to the Federal Reserve, Treasury, and White House in just 10 years.
We continue to underestimate what is possible in a decade.
Can’t wait for the next 10 years ?
— Pomp ? (@APompliano) July 16, 2019
The permabulls do not appear to be fazed at all by this recent downturn, with the likes of Anthony Pompliano leading the fray to ask for a focus not in the moment, but on the next decade, applauding how Bitcoin has gone “from the basements and black markets to the Federal Reserve, Treasury and White House in just 10 years”.
Market commentator Josh Rager also noted that previous pullbacks within a bull market have lasted for weeks, but positive sentiment did take over. The sentiment for now, however is that: “Market structure is broken and lower-lows have been set on higher time frames… There will be smaller bounces in between, but it looks like the trend has changed folks – for the short term.”
Of course, some are suggesting that this current drop is all because of the Libra Senate Meeting in the US just concluded, with other bearish thoughts also emerging thanks to speculation that more restrictions and hurdles are yet to be overcome for Facebook’s private crypto, and a perceived negative bias towards Bitcoin and crypto in general because of Libra.
But in the end, whoever will carry the blame for the past few days of misfortune, it does appear that the short term climate is one of uncertainty, and traders would do well to use tight stops. Holders will take some joy, though, in discounted prices.
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