Bitcoin (BTC) price took a seemingly unexpected turn over the last week as the digital asset shed nearly $2,000 over the past 5 days. Last Sunday Bitcoin looked strong with a peak at $8,727 but by Friday the price found a floor at $6,776.
With a drop of 22% within just 5 days, can investors expect a bounce to reclaim the lost ground, or will Bitcoin head to new lows to close out 2019? Let’s take a look at what could happen next.
Daily crypto market performance. Source: Coin360.com
Why did Bitcoin dump?
Currently, there are many theories flying around Twitter. For example, some attribute the drop to the Plus Token scammer identified as a whale that dumped 7,000 BTC on Huobi. Others have suggested that the FUD surrounding China’s recent vow to dispose of crypto exchanges directly impacted crypto prices. It’s hard to gauge whether the current price swings are perfectly normal, or maybe, just maybe it’s some dude selling a lot of Bitcoin to buy something (god forbid).
One thing is certain, and those of us who have been involved in the crypto space for a number of years will understand this point. China-driven FUD is a very real catalyst for negative price action. Whether it’s actual Asian sellers or Western investors panic selling is anyone’s guess, but it is worth noting that from a technical perspective Bitcoin price could be perceived as behaving as expected.
Analysis of Bitcoin’s monthly chart provides explanation of the aforementioned theory.
BTC USD monthly chart. Source: TradingView
The Bollinger Bands indicator on Bitcoin’s monthly chart tells one of two tales. Using the Bollinger Band moving average as a level of support in the $6,900 region, one can see that despite breaking through ever so slightly, Bitcoin price still bounced up from this level both on Nov. 22 as well as today.
This can be interpreted in one of two ways. The price broke the moving average so the next step is down towards the bottom of the Bollinger Bands, which in…