Buy the Rumor, Sell the News?

Bakkt Warehouse custody opened yesterday, as clients were able to deposit Bitcoin funds into the accounts. However, minutes after the tweet announcing the opening, the price of Bitcoin dropped by $700 — a classic example of buying the rumor, selling the news.

Let’s take a look at the charts to see where the market is standing. 

Bitcoin price performance

BTC/USD chart. Source: Tradingview

According to the last article, Bitcoin reclaimed the $9,800 level as support and started to rally upwards to the heavy resistance zone of $10,800-11,000. Not only a horizontal area of resistance but also a downtrend line facing up. 

More interestingly, the moment that Bakkt tweeted their opening, the price fell from $10,900 to $10,200. 

A classic example of the concept “Buy the rumor, sell the news” in which traders and investors buy an asset expecting a positive outcome from a certain event in the future. 

However, when the actual event takes place, mostly it doesn’t impact the price and the price drops back off to the original levels. 

During 2017, this was a widespread phenomenon with altcoins making announcements, causing the coin to move up. Another major example is the halving of Bitcoin and Litecoin. Previously, their prices ran up prior to the event while dropping down after (or slightly before) the event took place. 

General overview Bitcoin

BTC/USD Weekly chart

BTC/USD Weekly chart. Source: Tradingview

Checking the general overview gives a perspective of re-accumulation after the first break upwards. In the scenario of 2016, there’s also the period of sideways movements, while the 21-Week EMA started to catch up. 

In the current scenario, the market is still waiting for confirmation of the bull market before it’s able to trend upwards.

Not only is the 21-Week EMA substantial support according to the previous bull market, but some fundamentals (e.g. record hash rate)  are also coming into play as well. 

In May 2020, the halving will occur, which overall causes a bullish effect on…

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