Bitcoin has pulled back from seven-week highs above $8,400, but the bullish breakout confirmed on Jan. 6 remains valid.
The price drop was backed by low seller volumes and should be reversed.
The bullish case would weaken if prices find acceptance under key support at $7,567.
Bitcoin has pulled back from multi-week highs but remains hovering in bullish territory above key support near $7,600.
The number one cryptocurrency is currently trading at $7,910 – down 6.5 percent from the seven-week high of $8,463, consistent with CoinDesk’s Bitcoin price level (BPI).
The pullback began during the U.S. trading hours on Wednesday with gold and other safe havens losing ground on easing of geopolitical tensions.
“Bitcoin’s price dropped right down to $8,100 (from $8,300-$8,400 range) right as President Trump announced at 11 a.m. ET that the U.S. won’t escalate the conflict with Iran,” Hong Kim, co-founder and chief technology officer at Bitwise Asset Management tweeted Wednesday.
Popular analyst Ran NeuNer also put out a tweet, drawing attention to the very fact that both bitcoin and gold moved lower following President Trump’s speech.
Bitcoin has moved in tandem with gold since Friday. The cryptocurrency turned higher from lows near $6,850 on Friday after the U.S. attacked Iran and clocked seven-week highs during the Asian trading hours on Wednesday. During an equivalent time-frame , the alpha-beta brass rose from $1,530 to 6.5-year highs above $1,611.
So, it appears as if markets are starting to treat the cryptocurrency as a haven asset, as noted by NeuNer.
That makes bitcoin susceptible to a deeper pullback in gold, which is currently trading at $1,547 per Oz, representing a 4 percent drop from Wednesday’s high of $1,611.
The alpha-beta brass could slip further, possibly dragging bitcoin lower, because the European equities (risk assets) are flashing green and therefore the futures on the S&P 500 are adding 0.33 percent.
That said, bitcoin’s short-term bias will remain bullish as long as prices are holding above key support near $7,600.
Bitcoin is flashing red for the second day. However, the previous resistance-turned-support of the inverse head-and-shoulders, currently at $7,567, is intact.
So, the bullish breakout confirmed on Jan. 6 remains valid and therefore the path of least effort remains to the upper side.
Markets usually displace weak hands (traders with limited ‘HODLing’ power) by revisiting former hurdle-turned-support before building on a serious breakout.
Bitcoin jumped 5 percent on Tuesday, confirming an upside break of the six-month-long falling channel. The channel breakout signaled a revival of the market from lows near $4,100 seen in April 2019.
Therefore, the 6 percent pullback might be the market’s plan to shake out weak bulls. Also, trading volumes have dropped over the last 18 hours.
The price decline is amid a slide in volumes. The red bars, representing selling volumes, are small compared to the green bars or buying volume witnessed earlier in the week .
A low-volume price drop is usually short-lived.
The probability of a slide to the crucial daily chart support of $7,567 would increase if prices find acceptance below the 100-hour average at $7,825 on the rear of strong volumes.