Are the Bitcoin Bears Back for a Mauling?

Casper Brown Bitcoin December 5, 2019
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Are the Bitcoin Bears Back for a Mauling?

BTC USD is now trending strongly bearish, with successive downturns in September, October, and November 2019. The prevailing price is hovering around $7,350 per unit BTC, significantly lower than the 50-day moving average of $8,331.03 and the 200-day moving average of $9,416.32. Based upon the current technical indicators, the pivot points for the BTC USD pair indicate the following levels: pivot point at $7,903.55, with the first resistance level (R1) at $9,246.96, and the second resistance level (R2) at $10,922.16. The first support level (S1) is holding at $6,228.35, and the second support level (S2) is holding at $4,884.94.

Source: StockCharts BTC USD Bollinger Bands

Bollinger Bands (20,2) are an important technical indicator in cryptocurrency trading as well. These bands typically capture approximately 90% of price action for the digital currency and when the price trends above the band, it indicates that Bitcoin is overbought. This is a strong signal that a correction will be taking place, and a sell action is likely. When Bitcoin prices lay above the band, it is a good idea to sell the cryptocurrency. The current Bollinger Bands have a median price of $7,722.10, while the prevailing price is around $7,350 per unit. The upper end of the Bollinger Bands is hovering around $8,752.36, and the lower band is priced at $6,691.83.

It seems unlikely that BTC USD will rally towards its 200-day MA, given that there are now significant divergences between the prevailing price and the short and long-term moving averages. There hasn’t been any sideways consolidation in the price of BTC USD where traders are likely to see the Bollinger Bands closing in around the price of Bitcoin. We can expect a price breakout to take place when the Bollinger Bands tighten around the price of BTC USD – for now that is unlikely to happen, and it was last witnessed in mid-October when Bitcoin consolidated around the $8,300 mark. At that point, we saw a dramatic breakout towards $9,416 within weeks, before additional consolidation took place and the price plummeted to $7,000 in late November.

Why is Bitcoin Trending Bearish?

The bearish momentum that has engulfed the cryptocurrency arena has taken place since June 26, 2019 when Bitcoin hit a high of approximately $12,800 per unit BTC. Since then there has been a steady and consistent depreciation of the world’s ranking cryptocurrency to its current level of approximately $7,350 per unit. However, BTC USD started 2019 in an unspectacular fashion, at $3,761 per unit. If we use the prevailing price in early December as a yardstick, this digital currency has generated 100% returns for the year-to-date. Clearly, this is nothing short of spectacular performance from Bitcoin, despite multiple pullbacks in Q3 and Q4, 2019. The technical indicators are trending bearish with most analysts attributing a sell or a neutral rating to Bitcoin.

Some analysts point to December being a particularly significant month for Bitcoin. Recall that in December 2018, Bitcoin bottomed out as the price hit $3,166 per unit. If we rewind to December 2017, Bitcoin topped out at $20,000 per unit. The big question is what will happen throughout the course of December 2019? Already the evidence is trending bearish with prices moving markedly lower. The fact of the matter is that traders are going short on BTC USD after successive weeks of losses and rejections at multiple key resistance levels. Those who believe that Bitcoin has lost altitude are certainly warranted in their opinions, and the RSI (Relative Strength Index) supports the bearish notion.

Some speculators believe that Bitcoin’s dramatic declines are due in no small part to Chinese efforts to crack down on the cryptocurrency. The digital currency lost $3,000 in a little over a month between October and November 2019. The Chinese government is hellbent on curtailing the operations of businesses that work with cryptocurrency. This marks a dramatic reversal from the premier’s desire to facilitate greater adoption of blockchain technology. The People’s Bank of China (PBOC) has taken a hard-line approach to cryptocurrency exchanges, and this has sent markets into a flutter. Dubbed the ‘China Crackdown’, this new assault on Bitcoin is having a strongly bearish effect on the digital currency. Fortunately, Bitcoin is no stranger to whipsaw activity in the financial markets. It rises and falls with abandon and this is par for the course for the world’s ranking cryptocurrency.

BTC USD is Trading Well Below the 50-Day MA
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BTC USD is Trading Well Below the 50-Day MA
BTC USD is clearly bearish with the current price level trending well below the 50-day MA and the 200-day MA. Where to next for the world’s premier cryptocurrency?
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Author: Casper Brown

I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.

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Casper Brown 227 Articles

I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.

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