On Thursday, the super impressive surge in BTCUSD that had resulted in the market stalling just shy of the record peak from 2013, came screeching to a dramatic halt, with the market crashing down. The price of Bitcoin was down as much as 20% off the high of the day, before recovering and closing down by a more modest 10% on the day. But the cryptocurrency is likely to remain under pressure in the days ahead before any consideration is to be given for a rebound back towards the record high.
So why is this? Well, first things first, even when you consider the intensity of Thursday’s decline, the fact remains that the market has seen an even more intense rally to the upside in recent months. And so even after Thursday’s drop, both weekly and monthly technical studies are still well overextended and calling for additional corrective declines. Furthermore, moves of this magnitude in a new and developing market are not unusual. When you look back at price action since the inception of BTCUSD’s young life this becomes quite clear.
Where to from here? Technically speaking, as per above there is room for a more pronounced decline in the weeks ahead. While we believe in the idea of bitcoin and that the next big technological breakthrough in the world will come by way of the blockchain, this is still not a market to be trading for those that look for the type of liquidity and scale needed to trade markets effectively. That being said, if we are to look at the chart, it would seem that BTCUSD should start to find some support into that previous breakout area from June 2016 in the $700s. And given that markets have a tendency to overshoot, we would consider the currency as a compelling long trade somewhere in the $500 range.