Bitcoin Market Report: 29 March 2019
Bitcoin’s price had been rejected at a key resistance zone once again, with buyers running out of steam – until a surprise and potentially suspicious move to the upside.
Even a brief look at the daily chart for bitcoin gives context for what we see on the short-term chart. On the daily, it’s clear that there is a band of resistance just above $4,000. Several times now this year, bitcoin’s price has risen towards that and then dropped back. Traders are collectively reluctant to buy bitcoins above about $4,050, knowing that they will likely be left holding the bag. Almost every time the price pushes towards that level, the selling happens a little sooner to pre-empt that outcome – hence the series of lower lows we plainly see on the daily chart.
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That’s exactly what happened this week once again. The 4h chart shows a sudden spike upwards on Wednesday, bringing BTC back above $4,000. But there was not sufficient momentum to go higher. Then this morning, apparently out of nowhere, came another spike – this time to $4,100 (at the time of writing).
The next move is likely to be very meaningful. A close above this level would be a positive signal for the short term, at least; a retracement would simply confirm traders’ already bearish bias.
High prices, low volume indicates possible bearish pattern
Right now, there is a fairly well-defined area of activity for bitcoin. As we have seen, volatility has been extremely low this month – perhaps the lowest since before bitcoin’s run-up in 2017. On the weekly, a clear picture of higher prices on progressively lower volumes is forming: a bearish pattern, since it shows that fewer and fewer traders are willing to buy at these prices. When this weekly candle closes on Sunday, the monthly and quarterly candles will also close. All of those will factor into longer-term traders’ decisions of what position to take.
A period of consolidation like the one we have seen so far this year suggests that a large move is probably on the cards. It’s impossible to know which direction bitcoin will take, of course, but the macro picture points to downwards being the path of least resistance. That lacklustre volume, lower highs and faltering reaction rally on the weekly are not cause for confidence.
Market Manipulation at work?
This is why the sudden price move to $4,100 is suspicious. It may be a concerted effort to ‘paint the tape’, ensuring that the month closes positively. Or it could be another fakeout, designed to lure in hopeful traders with dreams of a higher high – only to find themselves on the wrong end of the trade once the whales sell. Of course, it could also be the resolution of the consolidation. It’s extremely hard to know for sure unless you’re one of the insiders in question.
There are some good signs for crypto. The Economist essentially declared bitcoin dead this week, which seems like a powerful contrarian signal, especially since the article was so one-sided it lacked any positive perspective whatsoever. If that reflects wider sentiment about bitcoin, then there can’t be many sellers left.