The following article is the rework of the thoughts put forward by Mati Greenspan, the Senior Market Analyst at eToro.
Bitcoin’s sudden turn in the wake of a bull run after a swift pullback has probably baffled the crypto-community. While ‘Bitcoin’s volatility’ can be blamed for almost all price movements. However, the trigger, in this case, seems to be the US Federal Reserve increased concerns over Libra.
Whether connected or not, we may never know, but the drop in bitcoin yesterday definitely happened on the heels of the Fed Chair’s comments. The purple circle here shows at around 12: 00 hours UTC is the time when the Fed addressed the Libra situation. What followed was a swift drop. Powell said at the Congressional meeting,
“Libra raises serious concerns regarding privacy, money laundering, consumer protection, financial stability”
Libra announcement came as a positive piece of news for Bitcoin. The supporters of Bitcoin envisioned increased adaptability of Bitcoin with Libra’s launch. So, the Fed’s call for increased oversight certainly has the potential to delay this from happening.
Moreover, correlation does not mean causation, and my personal feeling is that most crypto traders are not exactly watching the Fed testimony for signals of when to buy and sell bitcoin. However, the timing here is more than enough to raise suspicion.
Bitcoin [BTC] Trading Range
Though yesterday’s volatility was a bit harsh, this is the kind of thing that bitcoin traders should be used to already. After failing to breach a new high, the market began very quickly, testing the lower bounds of the current range.
Bitcoin touched a daily low at $11,163; however, it is back above $11,500 at press time. Bitcoin fell from $13,100 as it failed to break above the yearly highs at $13,8000.
As we’ve stated before, the upper bound is very clearly defined. A breakout above $13,800 (yellow line) would no doubt spur FOMO. However, the bottom of the range is a bit less clear. Various chartists will no doubt identify several key points within the blue box (between $8000-$11,400) that could be named as support.
No doubt, the big one that many will gravitate to is the psychological round number of $10,000 per coin. The momentum will likely shift to the bearish side. Moreover, the lower the Bitcoin price falls, the longer it will stay down.