Bitcoin just dropped from around 9,800 down to the 8,100 level, and has since bounced a bit back. It is currently trading around the 8,600 level.
There is a lot of chat on twitter and tradingview right now, and for a good reason. This is quite the move on BTC, and we are merely hours away from the next bitcoin halving (43 hours roughly).
So what is likely to happen in the upcoming hours? Will we see bitcoin continue further down, below the trendline that currently supports it around the 8,000 USD level, or will we see it bounce back up from here, back into the 10K territory?
As you can see from the image below, the trendline (image showing 1hour timeframe), has been supporting BTC all the way to 10K. Will it be strong enough to keep BTC around current levels?
I personally think the current drop should be analyzed from a manipulative perspective rather than a technical one.
Because of this, I think it depends more on the amount of speculative long positions still in play, that smart money wants to see liquidated before a move back up. There is no doubt this move down came as a surprise to a lot of margin traders (just take a look at liquidated positions).
It is also rare we get a move much larger than 10% in a single day (although it does happen).
Another aspect to keep in mind is that this is weekend trading, so this current move will show as a gap on CME when the markets open again tonight – and gaps tend to be filled.
While I am in no position to tell you if BTCUSD will continue down, or bounce back up from here, I think the current level may be a good place for a bet on the long side. Take a look at the 5-minute chart below.
As I plan to enter a tiny long position here, I will use a possible break of the descending trendline as an entry point, and place a stop down around the 7,900 level.
There is no guarantee this will play out in my favor. There never is any guarantees. Despite what you are being told on twitter and tradingview, no one ever knows what the price will do.
One thing is for sure. Lots of people have now closed their former long positions, expecting a further move to the downside – and maybe, that´s our clue that price will go up.