Bitcoin Could Dump to $5,000 If This Pattern Plays Out
The consolidation for the entire month of December has continued for Bitcoin as it holds above key support. If the next moves down are similar to the previous ones however it could soon be as low as $ 5,000 according to one analyst.
Bitcoin Consolidation Continues
For another day BTC has held above $ 7,000 as its sideways trading continues. A Christmas day dip to $ 7,120 was quickly recovered as the asset returned to top $ 7,200 where it currently trades according to Tradingview.com.
Bitcoin has remained in this range for a month now but technical signals are starting to show signs of another large movement.
Trader and analyst ‘CryptoHamster’ has been observing the Bollinger bands which appear to be squeezing again. This is often a precursor to a large move but overall trends are still bearish.
Daily Bollinger Bands width has been relatively narrow already for a while. Such periods are getting longer with the every new one.
It is time to get wider, IMO.
(A speculative hint: the order of the moves exiting the narrow BB area is: down – up – …)$ BTC $ BTCUSD #bitcoin pic.twitter.com/vBdBlujJ6u
— CryptoHamster (@CryptoHamsterIO) December 26, 2019
General consensus among traders is that the bulls are running out of steam so a move to the downside is more likely.
Taking things a step further the analyst has plotted previous large moves and observed that they were all by about the same amount.
“$ 850 zones with major drops that are twice larger. That’s what would happen, if this continues to evolve in the same way. The lack of the correction up at some point might be a sign of the last drop before the bottom. Hopefully, we could stop at 200WMA.”
850$ zones with major drops that are twice larger.
That's what would happen, if this continues to evolve in the same way.
The lack of the correction up at some point might be a sign of the last drop before the bottom.
Hopefully, we could stop at 200WMA.$ BTC $ BTCUSD #bitcoin pic.twitter.com/HnLLpdGZh5— CryptoHamster (@CryptoHamsterIO) December 26, 2019
If the pattern plays out the next dump will be back to the mid-$ 6,000 zone before another brief bounce. A further $ 850 down from there puts Bitcoin at $ 5,000 which is pretty much exactly where the 200 week moving average lies.
This has provided solid support for the past couple of years so a fall through that would spell impending doom for BTC and its brethren.
The Halving Effect
Keeping with the bearish sentiment, there is a possibility that there will be no halving pump until quite some time after the event. The stock to flow model has already been questioned by analysts.
Pressure would be put on to miners if prices do not continue as profitability will return to the levels in December last year after the block reward is cut.
Hash rates are at record highs so without a pump the returns from mining will slump to those when BTC traded at $ 3,500. This would put massive pressure on hardware manufacturers who have been shelling out recently to remain competitive.
Of course this is just one scenario of many for Bitcoin next year and there is still hope that 2020 will be a year for the bulls.
Image from Shutterstock
The post Bitcoin Could Dump to $ 5,000 If This Pattern Plays Out appeared first on NewsBTC.