Bitcoin Price Reversing after Epic Weekend Rally, What will Monday Bring?
This weekend saw one of the most volatile periods for Bitcoin in over a year, with prices surging up by $1,500 over the space of 48 hours. The parabolic uptrend that saw a 25% price increase was interrupted on occasion by only minor dips of $200 to $300 at a time – amounts that would have seemed excessive not that long ago.
The rally started slowly on Friday night but took off in earnest on Saturday morning (GMT) when the Bitcoin price smashed through the significant $6,400 resistance level. Within an hour it had quickly escalated to $6,950 where it hit resistance and fell briefly to $6,680 before finding support. For the rest of the day, it looked like it would struggle to break $7,000 but just before midnight on Saturday a surge of fresh volume pushed it to $7,398 within the space of an hour.
Throughout Sunday, three more big injections of volume helped push the price to a high of $7,581 but eventually it seems, buyers ran dry. After dropping sharply back to $6,769, Bitcoin found support and has managed to scrape back above $7,000. Volume is low though and for now, it seems, volatility has reduced.
What drove the rally?
Several factors and theories have abounded throughout the weekend, from manipulation to the U.S.-China trade war to plain old bullish sentiment. Some of the most compelling reasons are linked to the recent Bitfinex/Tether scandal and the Binance hack that followed soon after. Some say the lack of negative effect they had is an indication of how strong the crypto market is, others say these events represent the very reasons that have helped artificially inflate the market.
It is certainly possible that traders may have moved significant amounts of capital out of Tether (USDT) and into Bitcoin following revelations that it isn’t backed 100% by USD reserves. Other analysts look to developments in the industry, like that of Fidelity Investments, E*Trade Financial, and TD Ameritrade all looking to add crypto trading services to their platforms in the near future.
As usual, crypto seems to have a mind of its own and few within the industry can agree on a specific reason. Most likely, it’s a combination of a number of these factors.
So will Monday see more gains or more losses?
The Bitcoin price is difficult to read right now. The majority of analysts seemed to think the rally would continue upwards if $7,300 resistance was broken, yet somehow it didn’t hold. While it’s admittedly still climbing for now, it’s doing so in a far more reserved manner. Maybe everyone just had an over-exciting weekend – after all, BitMEX hit a record $10 billion in trading volume.
There are several factors that could push it one way or another, the first of which would be Monday morning traders waking up soon. With global crypto sentiment currently at a high point, there is likely to be a fresh influx of volume in the coming hours. However, if ‘FOMO’ buyers are maxed out then we could see a lot of fresh short positions being established.
Naturally, after all these gains, the weekly RSI puts the Bitcoin price in overbought territory and MACD is heavily extended on the daily timeframe. Money Flow Index (MFI) also reveals Bitcoin as overbought so this means there could be a period of consolidation before any more big moves.
On the downside, more and more somber analysts are pointing out the possibility of a strong correction. Support levels of around $5,600 are being mentioned, with some seeing the possibility of a retracement below previous lows of around $3,000. At this point, I guess, anything is possible.