Yesterday, we reported that Bitcoin (BTC) wasn’t looking all too hot. As pointed out by analyst Joe McCann, for the first time in four-odd weeks, BTC’s upward momentum has slowed dramatically, with the recently-closed candle looking rather skimpy. Or in other words, “the weekly chart [is] looking at bit out of gas for Bitcoin.”
What’s equally as harrowing is that there has been a large drop off in market volumes, signifying that bulls aren’t ready to pick up the slack, and shows signs of market indecisiveness. But more importantly, the weekly candle has taken the form of a Doji, a special candle formation that is marked by a skinny body (similar open and close price) and long wicks, meaning that the asset in question traded in a large range. Dojis often signifies the end of a trend.
This analysis proved to be correct, surprisingly enough. In the past 24 hours, Bitcoin has collapsed by some 8.5%, falling under $8,000 for the first time in weeks. And as seen below, BTC even briefly touched $7,850 on the back of a harrowing influx of selling pressure.
While some are convinced that this is a temporary reverse “Bart”, meaning that BTC may soon recover to the upside, this sudden collapse has elicited bearish (or at least cautiously optimistic) sentiment from a number of analysts. The parabola that Dave The Wave painted, which acted as support from December’s $3,150 bottom to now, has finally been broken.
As to where, Bitcoin could head next, some have had some theories. Josh Rager recently noted that with Bitcoin’s most recent candle on the daily chart closing bearish, down over 5%, he expects for the cryptocurrency market to continue to “push down quite aggressively.” In fact, Rager writes that if “bulls don’t step in” to reclaim a level like $8,200, he would be inclined to suggest that Bitcoin may reclaim a CME futures gap at $7,175, rather than rebound to post new year-to-date all-time highs.
Bulls may get some short-term reprise, however. Bravado’s Bitcoin Jack recently noted that BTC could find some support in the low-$7,000s, which is where bulls needs to step up to the plate to regain control of the wheel. And as Rager adds, “due to the amount of volume, it’s more likely [that] price has short-term relief… before another push down to retest support.”