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Despite the fact that the bitcoin hash rate hit another all time high at 83.5 TH/s hinting that the price may follow soon, the bitcoin’s price action leans more towards the opposite scenario. In a blog post we published two weeks ago, we analysed the most recent price action concerning BTC/USD. Today, we are revisiting the world’s biggest digital coin as it faces decision time, which is likely to influence price movements in the short and mid term.
In the previous blog post, bitcoin had been moving lower with an aim to retest the major bull/bear line, (the blue diagonal trend line in the bitcoin price chart below), which currently sits at around $9,300. Since then, bitcoin has recorded two bearish weekly candles, and more importantly, it broke and closed below 100 DMA, located around the $10,000 handle.
As seen in the weekly chart above, the price action had been creating the lower highs over the recent weeks and months. This has led to a break of an important support level - 100 DMA - and a decisive test of the major bull/bear trend line. A break will pave the way for more substantial losses for bitcoin bulls.
The importance of this trend line is extremely high. Since its inception, the trend line supported the bulls for 19 months before the first break occurred. The bears then kept the price action below it for around 8 months. When we take this data into consideration, we come to a conclusion that this trend line has historically shown strength to support the trending side, which is now the bullish side. So, don’t be surprised if we bounce from here and continue higher.
On the other hand, a sustainable break and close below this trend line, let’s say below the $9,000 handle, is likely to cause more headache for the bulls. In this case, the next level of support will be 200 DMA, which now trades just below the $7,500 mark, but is ascending rapidly. Pay attention also to the important horizontal support (the red line), which trades at the $9,100 mark. Together, these two lines create a major support for the bulls and a mountain to climb for the bears.
Bitcoin trading volume has had a volatile year. After it hit a bottom in March, the volume significantly recovered in April and May, when it came close to breaking the all-time record by recording 450,000 in just one day. Simultaneously, bitcoin crossed an important milestone in April when it recorded the 400 millionth transaction since its inception.
The highest hash rate ever recorded, more transactions and the increasing daily traded volume all hint at the robustness of the bitcoin network. However, the price action currently leans more towards a bearish scenario. The next week or two are likely to be very volatile as the decision time looms over bitcoin.
Bitspark is a bankless money transfer ecosystem that enables businesses and people to cash in and cash out cryptocurrencies across Asia and Africa.