Following a volatile day and as Bitcoin continues to flirt with support $6k, we look at what’s going on with Bitcoin Price action.
Futures Expiration, Exchange Hack
Bitcoin price opened the day trading at $6335 and fell 4% to $6100 within 15 minutes at 2 pm EST. Thirty minutes later, BTC gained $445 and was trading at highs of $6,550.
The catalyst for the initial drop while uncertain is likely to be connected with either the CBOE XBT Expiration or the news of the hack on a Japanese based exchange Zaif, which indicated 5,966 bitcoins had been stolen.
In the hours since Bitcoin has been trading in a tight $50 range around $6400 while traders try to establish whether the market is bullish or bearish on lower time frames.
4 Hour Chart
Despite the hair-raising dump in price, it is important to note that Bitcoin ultimately closed the day higher and had a large bounce off support at $6100, meaning that while BTC is close to its yearly pivot lows, it is still finding its legs when being tested.
In the hours since resting just below $6400, Bitcoin has continued to push higher and is trying to consolidate price around $100 higher than before Wednesday’s sell-off.
Key Indicators the CMF RSI and Mac-D Histogram are all steadily trending higher, but without much conviction, suggesting that yesterday’s move may have been a case of drawing battle lines in a more lengthy period of consolidation.
A break of $6500 would suggest the bulls are back in control and a move below $6200 may suggest a risk of lower prices.
On the daily time frame, Bitcoin continues to consolidate around the lows of the quasi-falling wedge which it has been in for the majority of the year.
Despite yesterday’s volatility, on a macro level, Bitcoin is becoming less and less volatile as the year continues. Period of low volatility within a well formed market structure tend to be indicative of a large move to follow.
Major Move for Bitcoin Price Looms
With shorts at all-time highs, CME quarterly contract due to expire, the next creditors’ meeting of the Mt Gox creditors on September 26, 2018 and an answer from the SEC on the VanEck and Solid X Bitcoin ETF before the end of the month, it is more than likely Bitcoin will be letting off some fireworks in the final week of September.
If Bitcoin cannot hold $5,900 it is likely a fast move to the downside would follow. A move to the downside would open the door to retest previous highs and psychological support of $5,000, with many bearish commentators suggesting that this would lead to lower prices and a much longer period of consolidation.
For the bulls, another bounce higher from $6,000 and break above $7,500 would leave Bitcoin price ending the year in good shape for 2019.
[Disclaimer: The views expressed in this article are not intended as investment advice. Market data is provided by BITFINEX. The charts for analysis are provided by TradingView.]
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