Bitcoin has broken below $4000 USD following a sudden 12% sell-off. The dump occurred following the establishment of a third point of contact on a descending trendline from the all-time high of approximately $5000 USD, amidst speculation that China’s government may move to suspend the operation of some Chinese bitcoin exchanges.
The Dip Appears to Have Been Triggered by Rumors That China’s Government Will Temporarily Suspend the Operations of All Chinese Cryptocurrency Exchanges
The bitcoin markets are again testing the $4000 USD support area following a 12% drop, with prices currently hovering between approximately $3900 and $4000. The dip appears to have been triggered by rumors that China’s government will temporarily suspend the operations of all Chinese cryptocurrency exchanges coupled with the establishment of a third point of contact on a descending trendline from the recent all-time high of approximately $5000 USD.
The dip comes after a choppy fortnight of consolidation between the $4000 – $4500 USD area. The consolidation yielded several significant bullish indicators, likely contributing to yesterday’s sell-off. Notably, the bounce from $4000 USD to $4600 USD that immediately followed the retracement from $5000 USD produced signs of bearish volume divergence.
Looking at the markets from a long-term perspective we can see that the recent dip in price comprises a retracement from the 1.618 Fibonacci extension to the 1.0 Fibonacci extension, when measuring from the $1000 breakout area to the previous high of $3000, and back down to the low of $1820. One can also see signs of divergence when looking at the stochastic RSI on a weekly chart.
Charlie Lee Has Posted on Reddit Stating That a Trusted Anonymous Source Has Confirmed the Rumor
Much of the recent selling has been influenced by uncertainty pertaining to Chinese bitcoin exchanges, amidst rumors that the central government may move to suspend the operations of all cryptocurrency exchanges in China. Charlie Lee has posted on Reddit stating that a trusted anonymous source has confirmed the rumor. At present, it appears as though Chinese bitcoin exchanges will likely close operations for a brief period of time whilst the government clarifies its regulatory position.
Bitcoin cash appears to have broken from an inverse correlation with bitcoin in recent weeks, having shed approximately 12% of its dollar value during yesterday’s dip in btc price. BCH is currently testing the $500 USD support area.
Many altcoins have seen a slow week whilst the markets have been awaiting bitcoin to confirm either a bullish or bearish trajectory. 24-hour trade volume for ETH has consistently sat below $1billion USD over the last 3 days – less than half of the trading volume posted one week prior. ETH tokens are currently trading at approximately $280 USD, with price action comprising a slow grind downward following ethereum’s recent establishment of a double top formation at the all-time high area of $400 USD.
Litecoin has also undergone a significant retracement, with price action currently hovering at approximately $62.50 following LTC’s recent rally that established a new all-time high of approximately $91 USD.
Do you think that the markets will continue to dump if the rumor is officially confirmed, or are you expecting price to bounce off the $3900-$4000 area? Share your thoughts in the comments section below!