Bitcoin shocks cryptocurrency trades this week as it went downhill, rapidly erasing 38% of its 2020 price rally that had everyone on their toes about a massive bull-run. The flagship cryptocurrency started the year with a blast as it jumped 30% in the first month itself. The move followed BTC pushing past $10,000 during early February.
February has seen a lot of volatility with Bitcoin (BTC) crossing the $10,000 mark a couple of times. Following a bearish weekend, BTC surpassed 10k with a golden cross on the daily chart. Despite all the bullish sentiment BTC failed to hold at $1100 and soon dropped as low as $9250 region on February 20.
After staying in the 9.6k zone for around 36 hours, BTC surged as high as $9945 in less than an hour. This 2% move from $9,700 liquidated a mere $15 million worth of short-side positions on BitMEX, as leverage traders have been delivering their positions over the past day or two when Bitcoin started to stagnate.
Early 26th February, BTC hit three-week lows as it entered the sub $9100 region. With this drop, bitcoin was down 38 percent of the rise from $6,850 to $10,500 seen in the six weeks to February 13. The cryptocurrency fell below $9,400 on Tuesday, confirming a major bearish reversal pattern on technical charts. Additionally, sellers had breached the widely tracked 50-day moving average (MA) support for the first time since January.
Bitcoin drops more than 6% on the daily
Now Bitcoin has failed to hold $9000 as it fell through this region a couple of times and is now down 6.49%, trading at $8767 during press time. The three-day build-up has seen BTC fall more than $1100 since the weekend. This move from around $9,000 to $8,600 in a few minutes’ time, per data from Skew.com that was subsequently shared on online forums, liquidated $108 million worth of BitMEX longs
As previously reported by The Daily Chain, BTC showed early signs of being in a descending channel after the 10% drop over the weekend invalidated the earlier channel. BTC failed to break the key resistance at $9900, and as discussed earlier, it could see BTC drop as low as $7500. Popular crypto analyst Filb Filb, have said that mid-$8,000s are crucial for bulls to hold moving forward. Filb Filb wrote:
“Downside targets [of] the 200-day moving average, 20-week moving average, and 50-week moving average seem good for a bounce, but the 200-day moving average is never really lost in a bull run, so losing that could be more of a significant issue. Nevertheless, I’m looking for longs down there.”
Corona Outbreak fails to jumpstart Bitcoin
It is yet unanswered whether the bitcoin pullback is connected to the correction in traditional markets which is fuelled by Coronavirus fears. In the past, there have been a number of catalysts in the geopolitical space that have caused stocks and traditional markets to take a dip, and the resulting effect for Bitcoin has been positive. This was seen most recently when the threat of a US-China trade war loomed.
This time traders had hoped that Bitcoin would capitalize on fresh uncertainty in traditional markets due to coronavirus, but this failed to materialize.