Bitcoin (BTC) Technical Analysis: Crypto Market Dumps $5 Billion, Here’s What You Need to Know
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The crypto market has suffered another sharp decline over the weekend as a further $5 billion was removed within a matter of minutes. Bitcoin and a vast majority of the altcoins have started this week deep in the red, with some projects in the top 100 reporting double digit losses. Right now Bitcoin is down -0.23% against the US dollar and showing signs of a bearish continuation as the market responds to the latest crypto market crash.
The hefty sell-off that has rocked the market this week took place over 3 short successive trades on Sunday, January 20;
(1) The opening sell order happened at 11:27 UTC which crashed BTC down from $3,760 to $3,716 (-1.16%)
(2) The second occurred a few minutes later at 11:30 and drove the asset on to the $3,600 support (-3.10%) below before correcting.
(3) 40 minutes later at 12:10 UTC, the final sell off happened which forced BTC even further down to $3,543 (-2.76%).
On the BTC/USDSHORTS chart there seems to be no increased activity to suggest that the market has been impacted by exchange-based futures trading, nor does it appear that any BTC has been moved from the Mt Gox cold wallets recently. The flat price action before and after the sell-off also suggests that this sudden crash was unlikely to be the result of a mass exodus of regular crypto investors, as we would expect the price action to plummet in a more consistent downtrending manner.
It is therefore more likely that this crash was caused by either a large crypto mining company or exchange dumping BTC into fiat to continue funding operations, or potentially a series of high profile OTC futures trades executed with maximum leverage.
Diving into the 1D BTC/USD chart we can see that the #1 cryptocurrency has fallen back on the strong downtrending support line that was established back on November 23, 2018. This support has successfully held up BTC on 3 occasions in the past few months and could help to prevent further intraday decline.
We can also see that the recent increase in selling pressure has kicked Bitcoin into the red area below the $3,600 level, which has been highlighted before in previous analyses as a potential danger zone for the asset. We would like to see renewed bullish support drive off the current support and push BTC back into the green area above.
Looking at a number of 1D indicators however, we get the impression that panic is starting to set into the crypto market after these sell-offs which is likely to continue driving BTC downward over the short-term.
-There is a bearish divergence between the 12MA and the 26MA on the MACD indicator
-The Chaikin Money Flow indicator line has nosedived further away from the zero line above, as selling pressure increases.
-The Aroon Up line is bearishly below the Aroon Down line
Bitcoin (BTC) Price Targets
All losses are calculated from the asset’s current value at $3,587.
Support 1: $3,535 (-1.45%)
Support 2: $3,457 (-3.62%)
Support 3: $3,223 (-10.15%)