Bitcoin takes a beating
A little bit less than a week after we issued a buy signal for anyone not in the market already to go long at $9,300 Bitcoin futures on the CME plummeted over 15% and as of 3:00 PM EST is trading down $1,545 at $8,485. Although that is not to say that we didn’t issue any warnings or see this coming and a day after issuing a buy signal we wrote, “I wouldn’t recommend entering at this point if you missed the chance to earlier this week” and “conservative traders keep stops at $9,250 or even better pull profits” because after all we had hit our target price, “our target was at $10,000 noting that although it may continue higher we don’t have any clear data suggesting that it will move any higher.”
Although this correction did not take us by surprise the speed and swiftness of the price decline was something that we had not anticipated. So the real question is where do we see it heading now?
The first level of possible support is $8,200 the .618% retracement from the highs hit mid-February to the lows achieved mid-March. This would be an extremely shallow retracement however and I believe a more likely area for BTC to find support and ultimately pivot to the upside from would be at $7,440. This price is both the 50% retracement as well as the price of our 50-day moving average. If BTC cannot hold this level then a re-test of the all-time lows in futures pricing around $3,500 may actually be tested again.
The key is how much the halving of Bitcoin (in terms of how much Bitcoin is payed out to miners) will affect its price, and whether or not effects will be similar to previous halvings.
The halving which happened last night ahead of schedule in many traders’ minds was set to bring prices down before eventually exploding to the upside around a year later. Regardless if this current decrease in pricing was caused by this once in about every four year event or simply by traders anticipating its outcome and getting out of the market preemptively is yet to be seen but I believe the later of the two more likely. And that we will begin to trade to the upside once again after a little more pressure brings us to $7,440.