Price Analysis: Bitcoin continues to slide lower
The previous week was marked by predominantly negative headlines surrounding Bitcoin. The former president of the European Central Bank (ECB), Jean-Claude Trichet, stirred the cryptocurrency community with his remarks at Caixin’s conference in Beijing.
“I am strongly against Bitcoin, and I think we are a little complacent. [...] The currency itself is not real, with the characteristics that a currency must have,” said Trichet, who served as ECB’s Governor from 2003 to 2011, after acting as Governor of the Bank of France from 1993 to 2003.
“I have great doubts of keeping control of monetary value in [the cryptocurrency] domain. [...] In the so-called new stable international currencies […] the SDR would be the right basket,” added Trichet, while referring to Special Drawing Rights (SDRs) issued by the International Monetary Fund.
SDRs are not designed to act as currencies, but rather as units of account for the IMF, backed by a basket of currencies, including the US dollar, the euro, the pound sterling, renminbi and yen.
Trichet’s statement did not really surprise anyone who follows the statements of the current and former officials of the ECB. During the ECB’s Youth Dialogue meeting in May, the now former Governor of the ECB, Mario Draghi, reiterated the orthodox stance that Bitcoin is not a currency.
“Cryptocurrencies or bitcoins, or anything like that, are not really currencies — they are assets. A euro is a euro — today, tomorrow, in a month — it’s always a euro. And the ECB is behind the euro. Who is behind the cryptocurrencies? So they are very, very risky assets,” answered Draghi to a question asked by one of the winners of the award.
Elsewhere, Chinese internet giant Alibaba denied the “partnership” touted by Lolli CEO Alex Adelman. Lolli, an affiliate retail startup that gives online shoppers bitcoin instead of regular cash-back perks, first announced it plans to offer Bitcoin rewards to US-based Alibaba shoppers for Singles Day.
At first, Adelman’s claim surprised many as Alibaba has a history of anti-crypto decisions and statements. To this end, the e-commerce giant denied Adelman’s claims.
“One of Alibaba.com’s contractors hired a subcontractor who brokered an affiliate marketing program with Lolli. This was done without the knowledge of Alibaba.com,” it is said in the statement.
“Alibaba.com’s contractor is terminating the relationship with the subcontractor who was working with Lolli. As a result, Lolli should no longer promote or bring traffic to Alibaba.com,” said the representative of Alibaba.
This news comes just a month after Alipay, Alibaba’s digital payment arm, announced that it will be banning any transactions related to Bitcoin and other cryptocurrencies.
“If any transactions are identified as being related to Bitcoin or other virtual currencies, Alipay immediately stops the relevant payment services,” the company said on Twitter.
Looking at the price action, Bitcoin has made another step lower since the beginning of last week. As a result of this move, BTC/USD is now testing the 61.8% Fibonacci retracement of last month’s upward move initiated by Chinese President Xi’s positive comments on blockchain and cryptocurrency.
As seen in the chart below, the price action has been wedging in the previous three weeks. A comfortable close below the key 61.8% Fibonacci retracement, which sits at $8460, will open the door for a move below the $8000 mark. For this to happen, a close below the descending wedge’s support needs to happen as well, which would mean a sustainable trip to below $8300.
If the wedge and the 61.8% Fibonacci retracement are broken, the descending trend line that connects the previous lower highs will act as a first immediate support just below the $8000 mark. In addition, this is the same zone where the next Fibonacci retracement - 78.6% - is located. The final short-term target for the bulls is the 200 WMA, currently located at $7523, where a major horizontal support also sits.
On the upside, the descending wedge’s resistance is located around the $8950 mark, should Bitcoin suddenly decide to move higher in an abrupt fashion. As explained in previous blog posts, the zone between $9000 and $9400 is full of different levels of important resistance.