What should Bitcoin traders watch out for after the recent flash crash?
Bitcoin prices had a tumultuous few days, plunging to their lowest level in nearly a month yesterday before recovering and then falling again today.
The cryptocurrency fell to $ 44,457.11 around 4 a.m. EST, before rebounding and approaching $ 46,800 around 7 a.m. EST, according to figures from CoinDesk.
The digital asset has seen these price swings after suffering a lightning crash yesterday where it fell below $ 43,000, additional data from CoinDesk reveals.
The price of bitcoin experienced the aforementioned crash on the same day El Salvador adopted bitcoin as legal tender.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Following these sudden price movements, several market watchers offered technical analysis, highlighting key levels of support and resistance that bitcoin could encounter next.
Jake Wujastyk, chief market analyst at TrendSpider, intervened.
“The first thing to note is that although the price has been very volatile in recent days, the pullback was at a known level – the VWAP pegged from the all-time high,” he said.
Wujastyk provided some clarity on the anchored VWAP, noting that “it shows a volume weighted average price from a particular starting point (the anchor point.)”
“It’s almost strange how precise the anchored VWAP has been for Bitcoin,” he said.
“The price came straight back on it, then stopped going down. It could cross it and it would be bearish, but for now, the bulls should find this encouraging. “
“Note that the price has also struggled very hard with the $ 50 to $ 52,000 range. This is resistance (the selling pressure).
“But there is also support in the range of $ 40,000 to $ 42,000. It is possible that the price will hover in this range for a while before really moving. “
He summed up his contribution, offering an optimistic view.
“Taking this analysis together, I would say the winds are still behind the Bitcoin bulls, for now.”
“If the price fails to stay above $ 42,000 ~ (where the VWAP anchored All Time High is) or the anchored OBV turns red, then I would start to get nervous. Until then, I am optimistic.
Jon Pearlstone, editor of the CryptoPatterns newsletter, also intervened.
“Bitcoin has key support at the $ 42,500 level, as long as that holds the bulls have the advantage,” he said.
“If yesterday’s drop was the start of a more pronounced correction, traders should watch for a quick drop to test support levels of $ 37,500 and even below $ 35,000 if $ 42,500 doesn’t hold. “
“The bullish case here would see a consolidation between $ 42,500 and $ 47,500, then a convincing $ 50,000 breakout on the way to a retest of all-time highs of $ 65,000.”
Nick Spanos, co-founder of Zap Protocol, offered a more cautious approach.
“Bitcoin’s drop to $ 42,483 on Tuesday and its subsequent rebound to over $ 47,000 confirmed the $ 43,900 region as a key support level,” he said.
However, despite this rebound and Bitcoin’s still positive long-term outlook, it should be noted that further declines could be underway as the RSI has fallen below 50 and the moving average convergence divergence (MACD) is almost negative. ”
“The latter indicates that the 12-day EMA is lower than the 26-day EMA, suggesting that bearish momentum is building.”
“The significance of the RSI’s fall below 50 cannot be understated, as the RSI’s rise above 50 in July marked the start of Bitcoin and the recent bullish run in the crypto market. at large.”
He added that “the short term BTC resistance stands at $ 47,000; if this level is exceeded, Bitcoin will retest the $ 50,000 barrier. ”
Collin Plume, CEO and Founder of My Digital Money, described recent bitcoin price movements as ordinary volatility.
“Bitcoin has a 20-day moving average north of $ 47,000 and a 200-day moving average north of $ 42,000. This tells me that Bitcoin breaking through $ 50,000 to drop to $ 43,000 is still in what I would consider it an “average price move” because it is still within my tolerance level.
“A double digit decline is fatal for many traditional investors, but it is important to understand that Bitcoin is not a traditional asset.”
“A $ 5,000 short-term to long-term spread is strong evidence that Bitcoin’s fluctuations, while drastic to many, are the nature of the beast.”
Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, and EOS.