Bitcoin (BTC) Price Analysis: This Pattern Keeps Showing Up Everytime BTC Gets Manipulated
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Today’s Flash Crash
Bitcoin’s price has tanked once again, after another $25 Billion flash crash washes over the crypto market.
Two sell orders placed during the Asian trading session appear to be the root cause of the crash. The first sell off, placed at 00:00 (UTC+1) this morning, caused Bitcoin to unravel over 4.5% from $8,478 to $8,093. The second sell off followed an hour later, and sent Bitcoin packing a further 4.5% down to the dizzying low of $7,730.
What’s interesting is that a Whale alert was raised moments before the dump happened, signalling that somebody had moved 21,560 BTC ($213,365,390) from a wallet on to Coinbase. Suspicions have been already raised that this Whale/entity could be the culprit, and that the first crash used only half of the amount moved to Coinbase, which means that a second crash could come later.
What’s even more interesting, is that we are beginning to see the re-emergence of a recurring trading pattern that keeps showing up at every flash crash. Let’s take a look.
BTC Price Analysis
As reported in an earlier analysis, we noted that the price action on June 1 appeared to tracking inside a very similar inverse bart-simpson pattern to the one we saw on May 19. On closer inspection, we can see that not only did the pattern appear then, but if we invert it we can also see that the uptrend tracked almost perfectly inside it between May 26-30 as well.
This pattern has been incredibly prolific over the last 5 weeks, and only started to appear once Bitcoin had peaked over $8,000. Therefore, it seems likely that this a manipulation pattern employed by Whale traders to shake out the weaker hands in the current Bitcoin market.
The meteoric rise in BTC trading volume, volatility and emotional trading during ‘Crypto Spring’ has created perfect conditions for this type of manipulation to work effectively. By sharply dumping and pumping the price in quick succession, it helps to increase uncertainty in the market and cause smaller traders to act irrationally. This irrational behaviour translates to heightened levels of panic and FOMO, which drives traders to buy after the pump and sell after the crash.
By applying the pattern to the current price action (see below), we can see that there is a chance we may see Bitcoin recover over $8,000 and potentially break back above the $8,600 handle. Looking at the RSI on the 4-Hour chart, we can already see promising signs of a recovery as the asset rebounds out of the oversold region, and for now the price is continuing to follow the trend well.