Monday, 11 June 2018 07:15

Day of Red as Bitcoin falls below $7000

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The cryptocurrency market experienced a tumultuous weekend of red as the whole market fell off a cliff in a sudden sell off, the speed of which shocked most analysts.

Everyone expected a drop after the market saw the lowest volume (in a very long time) yet with an increase in price over the past week (Usually a sign of significant movement imminent)

Where Bitcoin goes the altcoins follow even more so and all altcoins experienced significant losses across the board, with the exception of the dollar backed currency Tether. Tether (USDT) was the sole safe haven as most investors fled to its relative safety. BTC fell to a low of $6630 at one point with the 1 Hour RSI reaching a low of 18 only to recover slightly back up to $6700.

The biggest losers in the Top 10 currencies over the past 24 hours were:

  • EOS = -14%
  • Bitcoin Cash = -8.9%
  • TRON = -12%
  • IOTA = -11.98%

top 10 cryptocurrency market cap losers

Current situation and possible scenarios:

Some tentative support was found at $6700 before dipping back down to $6600 but there is little stopping it from falling further. Almost no buy volume at present, as most traders wait to see confirmation of next move up or down, with stop limits set at various levels to protect against further capitulation. (Binance has a stop limit function to Tether which helps to protect against large drops in the market. Click here to find out how to register on Binance)

The outlook is still extremely bearish, which we realize offers little in the way of support for the bulk of investors. If more panic selling happens we might see RSI drop below 30 on the 1 Day chart and that means next support is $6000 to $6200.

If that range is defended then we could see a new mini bull run for a few days. In case that does not hold then it will go down further to the $5000 range.

We had a classic bear flag pattern that has now broken down. Sharp Decline + Low volume + Increasing Price = Bear Flag. There might be a short uptrend in the next few days only to break back down.

bitcoin bear flag

If that does happen then one scenario is a Retail Investment & High Frequency Trading* bots defense at the $6000 range.

Where to from here?

  • Scenario 1: Trade sideways for a while with green candle HFT Bot pump back up to the $7000 - $7500 range
  • Scenario 2: Trade sideways with another drop down to test $6000 to $6200
  • Scenario 3: We break $6000 and then all bets are off where the bottom is after that

If we do have a short bull run from here there will be the possiblity of taking profits in the altcoins like ONT, ZIL, BNB etc. We are placing buy orders in the $6000 to $6500 range in Bitcoin in case it breaks down further but not a signficant amount of capital. This is still a very high risk situation to trade in right now.

Please note that this is not investment advice and only the authors views on the current market situation. Investing in cryptocurrency is extremely high risk and should be done with the utmost of care. 

High-frequency Trading Explained:

HFT has been responsible for most of the trading volume of late with very little retailer traders active in current market. There influence can been by the large green and red candles throughout the 15 minutes chart.

“In financial markets, high-frequency trading (HFT) is a type of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools. While there is no single definition of HFT, among its key attributes are highly sophisticated algorithms, co-location, and very short-term investment horizons.HFT can be viewed as a primary form of algorithmic trading in finance. Specifically, it is the use of sophisticated technological tools and computer algorithms to rapidly trade securities. HFT uses proprietary trading strategies carried out by computers to move in and out of positions in seconds or fractions of a second” Source: Wikipedia

Bitcoin Chart: 1 Hour

bitcoin chart 1 hour

Bitcoin Chart: 1 Day

bitcoin chart 1 day

 

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