Bitcoin Bulletin Midweek Market Update
The market appears to have shrugged off a 7,000 BTC hack, with bitcoin’s price remaining close to its yearly high.
Yesterday saw bitcoin’s price peak at $5,970, the highest this year – and almost 100% higher than the low of $3,122 in December. Bitcoin has put in a very strong performance, though there are signs that it may now pause.
This article is for information only. Bitcoin Bulletin will never give you trading or investment advice.
The area around $6,000 – realistically $5,700 to $6,300 – will be a strong resistance zone. Bitcoin bounced here many times throughout 2018, and huge amounts of bitcoin changed hands in this price range. Technical analysis holds that old support becomes new resistance, and breaking this level will therefore not be trivial. Bitcoin’s price needs to close above this band to confirm a bullish break – and potentially a new uptrend.
It would be surprising if this happened on the first attempt. There are other signals that momentum is waning in the short term. There is bearish divergence on the daily chart – where price rises but the RSI is falling – and it’s likely that traders will want to lock in some profits here. BTC has fallen around $160 from yesterday’s high.
The immediate catalyst for that pullback may be the hack of Binance’s hot wallet, which saw 7,000 BTC removed. Binance has assured its customers that they will not be affected, and the funds – which total at most 2% of Binance’s total holdings (the proportion held in the hot wallet) – will be covered from the ‘Safu fund’.
In other negative news, Chinese messaging app WeChat is banning cryptocurrency transactions in its payment channels (along with certain other types of transaction), likely as a result of pressure from the Chinese government.