Many hands were burnt today, with the bitcoin price smashed to stunning lows amid huge downside volume. The panic selling was clearly evident, with scenes reminiscent of the those in the wake of the Mt. Gox collapse in February 2014 (albeit from a higher starting price). In this case, though, the catalyst is the market as the whole rather than a single exchange.
The fundamentals seem to be driven by bitcoin miners: many cannot profit until the bitcoin price recovers and / or the mining hash reduces, possibly leading to miners selling bitcoin reserves to cover costs which is further depressing the bitcoin price and perpetuating an ugly downward spiral.
January 14th Bitcoin Trading Session
At press time, the bitcoin price is sitting at around 180. After opening at 220, the price quickly formed a bearish flag during which 46,784 BTC were sold on BitFinex alone in just a few hours. This caused the price to smash through the 200 level and head to an intraday low of around 170– the point from which the famous 2013 rally toward 1,150 started. The price rebounded from the 170 level before being pushed back at 206 by a wave of selling and is now continuing its prevailing bearish breakout. As yet, there is no bottom in sight!
What to Expect Today?
The volatility towards the downside is skyrocketing, and the price is still unable to establish a definite bottom. The fundamentals at this time suggest a big rebound is very unlikely, although in times like this even technical indicators can lie.
The technical indicators are still on the side of the bears. The persistent downtrend has resulted in the RSI dipping into the selling area with the MACD way below neutral levels (the parallel 12- and 26-hour EMA further signifies that). Treating 166 as the next support level, the price could attempt a bullish correction only if it stays above the 200 mark. We have no real comments on the downside risk as the bottom is very much an unknown. Only enter the market if you are happy to face a bumpy road.
Conclusion (On Daily Charts)
Current Mood: Strong Bearish
Moving Averages: Strong Sell (0 Buy 12 Sell)
Technical Indicators: Strong Sell (1 Buy 8 Sell 2 Neutral)
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