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Bulls Beware: Maximum Pain Scenario Could Push Bitcoin’s Price Lower in Coming Days

The crypto markets have incurred overwhelmingly bullish price action over the past several weeks that appears to have confirmed many analyst’s belief that $3,200 truly is a long-term bottom for Bitcoin (BTC). The recent price action has drastically shifted overall market sentiment, and many investors are growing increasingly bullish with each new day.

Despite this shift, one highly-respected analyst laid out what he believes is a realistic “maximum pain scenario” for Bitcoin, explaining that it may surge to above $6,000 before incurring significant selling pressure that pushes it lower.

Bitcoin (BTC) Solidifies Position in $5,300 Range 

At the time of writing, Bitcoin is trading up less than 1% at its current price of $5,330, up from 24-hour lows of $5,260.

After incurring some light selling pressure during this past Sunday, Bitcoin has been able to continue climbing higher and appears to have firmly solidified its position in the $5,300 region, just slightly below its historically established resistance level that is exists at $5,400.

Over a one-week period, BTC is up significantly from its lows of $5,020, which were set last Monday. The cryptocurrency is currently trading just a hair below its seven-day highs of roughly $5,360, which were set earlier today.

UB, a popular cryptocurrency analyst on Twitter, shared his thoughts on Bitcoin’s current price action, explaining that yesterday’s small dip could have been just what was needed to spark a small rally that would confirm his bullish sentiment.

“$BTC – I wouldn’t be surprised if yesterday was “The Dip” before testing the local highs. I’d like to see a Daily Close above $5320 to further confirm my bullish argument. If I don’t see that in the next day or two, my bearish arguments will begin to hold more weight,” he explained in a recent tweet.

Will BTC Witness a “Maximum Pain Scenario?”

Although Bitcoin may be on the edge of incurring some significantly bullish momentum, a move higher may be directly followed by a drop back into the lower $4,000 region.

Alex Krüger, an economist who focuses primarily on cryptocurrencies, explained this possibility in a recent tweet, saying that he thinks another drop to $4,000 is the most realistic “maximum pain scenario” for the cryptocurrency.

“Maximum pain scenario for $BTC: – shoot through to $6000 – rest right above $6000, luring longs in – dump back down to $4000s in 2 days – have everyone scream ‘this is The End’ – slowly move back up,” he explained.

Although BTC was just trading at $4,000 a few weeks ago, the question remains as to whether or not the recent price surge and continued upwards momentum will build enough support levels to keep the crypto above the $5,000 price level.

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Bitcoin (BTC) May Have Bottomed, But Crypto Could Still See A “Black Swan” Event

In the eyes of analysts across the board, Bitcoin (BTC) decidedly bottomed at $3,150. They cite the fact that at $3,150, BTC was down 85% from its all-time highs, which is where the crypto asset has bottomed in previous cycles, coupled with the idea that industry fundamentals are better than ever.

And so far, this call has been vindicated, as BTC now sits at a casual $5,300. However, some pundits fear that a so-called “black swan” event could still strike this market, forcing Bitcoin and other cryptocurrencies to enter a freefall. Let’s take a look.

Related Reading: Crypto Professionals Predict $2,400 Bitcoin Bottom, Expect Infrastructure To Spark Bull Run

Why Crypto Could Head Lower From Here

Adamant Capital, an Alpha-seeking Bitcoin fund, recently released its latest report about the state of cryptocurrency markets. While the report, titled “Bitcoin in Heavy Accumulation,” had bullish undertones, its authors, which includes prominent analyst Tuur Demeester, weren’t remiss to not mention the cases for lower lows in this cycle.

Adamant’s researchers and partners gave three/four cases for a collapse to new lows in the coming months.

First, hacks or failures of exchanges and other infrastructure providers. While the unwinding of the 2013 rally was partially a result of natural cycles, some of the drawdown was catalyzed by the decimation of Mt. Gox, hacked for hundreds of thousands of BTC. Adamant postulates that if a similar event occurs in the coming six months, Bitcoin markets could see a negative demand shock.

Second, a macroeconomic crash. Although cryptocurrencies have been lauded as non-correlated assets to stocks, it was proposed that a collapse in traditional markets could create a situation similar to the “2008 paradox” of the value of gold falling by 30%, even as demand surged.

Last, a “secondary Bitcoin mining capitulation.” Adamant remarks that while miners have already capitulated in this cycle already, if BTC “drifts down” to $3,000, this capitulation could be replicated as miners go out of business en-masse.

Bitcoin Looks Hopeful

More likely than not, however, Bitcoin has bottomed. As reported by NewsBTC previously, the same report showed clear signs that BTC is in accumulation.

It was explained that the Bitcoin Unrealized Profit/Loss (BUPL) indicator, which aims to estimate how much BTC holders’ are cumulatively profiting or losing, is reading at $13 billion in the positive. If the indicator is adjusted for the approximate number of lost coins, however, BUPL currently reads at $3 billion — 3% — of unrealized losses.

While this doesn’t sound all too important, as the measure is lesser-known, as Adamant explains, the recent BUPL movements confirms that Bitcoin has exited a “capitulation” phase, entering into a stage of “hope” (and fear). It is important to note that when BTC exited the “capitulation” phase during 2014 to 2016’s cycle, there was strong BUPL uptick, as we are experiencing now due to Bitcoin’s recent rally past $5,000.

What’s even more optimistic is that the 60-day volatility chart for BTC is currently sitting at 5%, a level not seen since late-2016, and even fell as low as 2% in early-November 2018. This, as Murad Mahmudov once explained, shows that a Bitcoin rally could be on the horizon.

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Analyst: Bitcoin (BTC) Likely to Drop Towards 4,600 Before Surging to 6,800

Bitcoin has been able to continue its slow upwards ascent and is now tepidly advancing towards $5,400, which has historically proven to be a strong level of resistance that BTC has failed to break decisively above since it first began surging earlier this month.

Now, one prominent crypto analyst believes that Bitcoin’s fractal patterns may signal that it will drop towards $4,600 before incurring significant buying pressure that will send it surging up towards $6,800.

Bitcoin (BTC) Slowly Approaches $5,400

At the time of writing Bitcoin is trading up less than 1% at its current price of $5,340 and is up slightly from its 24-hour lows of $5,280.

Bitcoin has been slowly grinding higher over the past seven days, climbing from lows of $5,000 to its current price levels. This upwards climb has led many investors to flip bullish on the cryptocurrency, as its current stability does appear to be very positive.

Despite this, The Cryptomist, a popular crypto analyst on Twitter, explained that she is leaning bearish on BTC in the near term as it is currently forming a rising wedge pattern that may lead to a breakdown.

“$BTC Fibs on the RSI and candle upon the daily are still reacting well. Additionally, we have formed a rising wedge here on 4hr, which typically leads to breakdown. This is only invalidated if 5390 can be broken and sustained,” she explained in a recent tweet.

BTC May Drop Lower Before a Fresh Rally Begins 

Other analysts seem to concur with The Cryptomist’s cautiously bearish assessment of Bitcoin, as its fractal patterns may be signaling that further losses are necessary in order for the cryptocurrency to surge higher.

Galaxy, another popular crypto analyst on Twitter, discussed this possibility in a recent tweet, saying that BTC may drop towards $4,600 before it incurs enough buying pressure to send it surging up to $6,800.

“Based on this daily fractal we should get another chance to buy $BTC at $4600-$4800 levels before the next run to $6800. Similarities in both candles and volume,” he said.

Although it remains unclear as to whether or not the crypto markets will incur any noteworthy volatility during the weekend trading session, it is highly probable that traders will gain a better idea of where the markets are heading next as the fresh week kicks into gear.

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Analyst: Bitcoin (BTC) Likely to Soon See Massive Volatility as Golden Cross Pattern Forms

After losing its major upwards momentum roughly ten days ago when Bitcoin failed to break above $5,400, BTC has been able to hold steady above $5,000 and has tepidly clawed its way upwards towards $5,300.

Now, one analyst believes that Bitcoin will incur just enough buying pressure to propel its price up towards $5,800, at which point it will face significant selling pressure that may lead to a large drop.

Bitcoin (BTC) Slowly Climbs Towards $5,400

At the time of writing Bitcoin is trading up marginally at its current price of $5,300, up slightly from its daily lows of $5,230.

Although Bitcoin has been able to post minor gains over the past several days, it is important to note that is strongest confirmed level of resistance currently exists at $5,400, as BTC has failed to make any decisive advances past this level without being swiftly pushed lower.

Despite this, Bitcoin may be currently incurring strength that will allow it to surge up towards $5,800 – at which point it will likely find greater levels of selling pressure.

XC, a popular cryptocurrency trader on Twitter, shared his thoughts on Bitcoin in a recent tweet, explaining that he expects BTC to see another “scam move” up to the upper-$5,700 region, at which point it will be pushed back down.

“Seeing weak bearish moves all across the board here, think we get one more scam move up with a harsh peak around 5777,” he explained.

Bitcoin May Be on The Verge of Incurring Massive Volatility

One pattern that traders and analysts alike have been closely watching is the “golden cross” that Bitcoin is currently en route to forming. Previously, this pattern was only hypothetical, but it now appears that BTC will in fact make this formation, which would be highly bullish for the cryptocurrency.

One analyst believes that the formation of this pattern will lead to massive volatility that could either send Bitcoin’s price surging upwards or reeling downwards – depending on whether bulls or bears take this opportunity to strike.

“$BTC. Golden cross trajectory now April 24. (Was previously April 25). Should be interesting. Lot of hype that this is the “bull run” signal. If I were a bear or bull whale, that’s when I’d strike. Bull whale rides momentum of GC traders. Bear whale destroys their morale,” B.Biddies, another popular crypto analyst, explained in a recent tweet.

Assuming that there are not any massive price movements over the next several days that change the timing of the golden cross formation, investors and traders alike should not take the current stability in the crypto markets for granted, as it may not last for very long.

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Crypto Analytics Firm: Single Strategic Actor Responsible for Bitcoin Price Surge

The Bitcoin rally heard ‘round the world that began on April 2, 2019 painted the first higher high on Bitcoin price charts since the price of the leading cryptocurrency by market cap reached its all-time high back in December 2017. The powerful surge many believe could have signaled the end of the bear market and confirmed that a new uptrend has begun.

The over $1,000 rally may have also been the work of a single, calculated and strategic actor, who may have precisely executed a plan that drove the price up as much as possible.

CoinMetrics: Committed Actor Executed Trades At Key Times to Maximize Price Impact

The massive green candle that occurred on Bitcoin price charts on April 2 had everyone talking, from brokers, to bankers, and everyone in between. The powerfully bullish movement may have been the final blow to bears that signaled the end of the crypto winter that’s plagued the asset class throughout 2018 and 2019 thus up until now.

Related Reading | Crypto Analyst: Bitcoin Price Chart Shows Textbook Bump and Run Reversal Bottom 

The move, according to crypto research firm CoinMetrics, was orchestrated across multiple exchanges, at very specific times where liquidity is the lowest, in order to “maximize price impact while trading,” the firm said. More interesting is their theory that the entire thing was executed by one, single “committed actor.”

CoinMetrics reveals that the price movement started at approximately at 04:30 UTC time, which the firm says it the “point in the day where global liquidity is at a minimum.”

“Although this cannot be known for sure, such trades would have been designed to trigger stop losses and force a short squeeze through liquidations of margin positions and short futures positions,” they added.

The entire move lasted about one hour, ending at about 05:30 UTC. CoinMetrics further suggests that the time was “deliberately chosen” in order to create the most price movement possible in the shortest amount of time, maximizing “price impact.”

While conflicting reports across the web from various experts have suggested the move originated across three exchanges, Coinbase, Kraken, and Bitstamp, CoinMetrics instead claims the move began at HitBTC where roughly 500,000 Tether were traded for Bitcoin, then was followed by simultaneous buy orders executing on Coinbase and Bitfinex.

Related Reading | Bitcoin and Ethereum Trading Volume Reaches Crypto Bull Run Peak Levels

Other theories crypto analysts have offered have pointed to mistaken programmatic buying following an elaborate April fools prank. Bots did appear to influence the move, but only because the initial actor planned it that way, and took out stop loss orders that further caused a cascading effect, sending the price higher and higher. As the whale had planned, the trades had a significant impact – enough to potentially end the bear market and ignite a new crypto bull run.

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