Bitcoin Price Analysis 11.27.18: Bear Territory

| Publish date: 11/27/2018 (Last updated: November 27, 2018 10:22 AM)

Cryptocurrencies has been in a bloodbath over the last couple weeks, to bring to head the general downward trend in the cryptocurrency market since the beginning of the year. The price of bitcoin has been slashed by 69.8% in the year-to-date period; over the last one month, Bitcoin is down 41%, and it is down 17.5% in the last 7 days. The chart below shows the general state of the cryptocurrency market as traders and investors continue to exit the market in droves.

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When the price of Bitcoin started falling from around $13,000 at the start of the year many investors felt that the decline was necessary to shed off some of the speculative exuberance that the market acquired on the way to its 2017 highs.

By the time Bitcoin fell to around $6300 in July, many investors were conviced that they have found an oppunity to buy more BTC at a discount. However, as the support regressively declined lower at $5000, $4000, and now $3,600; the “buy the dip” camp is quiet and not many people want to buy or hodl Bitcoin.

This piece examines some of the factors behind the current weakness in the cryptocurrency market while provideing insight into where Bitcoin and the rest of the cryptocurreny market is headed from here.

Why is the Market Stuck in Bear Territory?

Many different people have presented a wide spectrum of deifferent reasons behind the decline in the price of Bitcoin and other cryptocurrencies over the last few weeks. Some people believe that the crisis in the Bitcoin Cash community and the emergence of BCHABC and BCHSV triggered the selloff in the market. Some argue that investors became wary of the uncertain regulatory environment and decided to move their funds into other less volatile assets. Some people believe that Bitcoin and other cryptocurrencies were overpriced and the market is trying to restore sanity into the valuation of many coins.

Some others are leaning towards conspiracy theorists that whales are manipulating the market to stampede retail BTC investors/traders to sell their coins in order to drive down the price so that  whales can snag up more coins at a significant discount.

In reality, all the aforementioned reasons can still be grouped under the realms of speculations—no one really knows the exact reason or combination of reasons behind the weakness in the price of Bitcoin.

Where is Bitcoin Headed From Here?

Bitcoin has been seeing massive 10% – 15% daily declines over the last week to establish what could be likened to a parabolic market in traditional stock analysis. The main challenge of the parabolic market is that the market loses the drive to test support levels and it doesn’t put up a particularly strong effort into establishing new supports. Hence, cryptocurrencies appear to be in a free-fall as the chart below shows Bitcoin crashing below all its untested support price points (green):

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However, the silver lining to the dark cloud of the current market bust cycle is that cryptocurrencies won’t continue to crash indefinitely. Contrary to what Wall Street naysayers will want to have you believe, Bitcoin is not worthless, its price won’t crash to $0 and the cryptocurrency market in general won’t fade into oblivion.

To begin with, if Bitcoin doesn’t begin to consolidate around the current $3,600 support, it will most likely continue to fall until it tests the $3,000 range. The consolidation can begin if the warring BCH camps reach some sort of compromise in the best interests of the entire industry. More so, news of definite regulation from the SEC of other such top regulators, if positive, could end the bearish trend for cryptocurrencies.

Another factor that could trigger a consolidation is that the people shorting Bitcoin, who are currently enjoying the decline in the market will eventually need to take some profits off the table. When they start taking profit, we will see a strong buying momentum which could then attract the silent investors watching from the side lines to kickstart a round of buying that sends Bitcoin back to winning ways.


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