Oil Collapses, Bitcoin (BTC) Drops Below $7k, Where to from Here?
As oil crashed to zero yesterday and markets around the world felt the crunch, Bitcoin (BTC) fell slightly below $7,000 but hasn’t been hit hard. Yet. Now holding its place around $6,800, the next few days could be crucial in deciding where Bitcoin goes from here.
BTC/USD is now in a relatively tight trading range, a similar area that it held towards the end of 2019. Recovery from the initial shock of coronavirus has been shakey so far but overall pretty good. Week-on-week it’s been a steady recovery from $5k but to continue upwards in the current climate would require some strong support.
Just above $6,900 now, BTC is retesting a bear flag that has been forming this week. Industry-wise, the news is fairly good, with the Bitcoin Futures platform Bakkt achieving its most active day this month. However, indicators remain bearish, with both long and short-term moving averages all sending sell signals. Oscillators are no more positive, with RSI neutral and only MACD leaning a bit to the buy-side.
So can bulls save the day?
Surprisingly, sentiment online and in social media seems quite upbeat, with many traders seeing an upside from here. With the occasional caveat: BTC might drop to around $6,300 from here before real recovery but if it loses $5,800 then we’re in trouble.
Chatter on CryptoTwitter sees a few shorters eyeing a move to $6,600 and a few optimistic bulls looking at $7,500. Realistically, with the current chaos engulfing the global economy I’m amazed anyone is trying to predict anything.
What about the halvening?
All this talk of oil collapsing has taken the focus off the Bitcoin halvening but that big event still hurtles towards us unabated. With a little over two weeks until the mining reward is halved, a new term is popping up: quantitative hardening.
What’s quantitative hardening you say? Well, it’s like quantitative easing only the opposite, obviously. Unlike with traditional currencies where central banks can just print money like it grows on trees, the Bitcoin supply can’t ever increase. In fact, the halvening reduces the supply making it even more scarce, hence: quantitative hardening. It seems like more of a fun description than a real technical term but hey, let’s see if it catches on. Although I wonder if the coiners know it was stolen from a 1988 paper on micro-magnetic techniques used to analyze residual stress?
So the long and the short of it is, we’re going to need some serious support to hold in the high $6,000s this week or its back down to $5k – or lower. Hopefully, we’ll get this from capital fleeing as a result of economic fears and the halvening hopium but who knows. Time will tell.
Oh, also: Ripple is suing Youtube for allowing XRP scams. That should be interesting…