Summary:
- Bitcoin price draws a promising candlestick, could it mark a tipping point?
- BTC daily transactions remain sluggish being a drag on the cryptocurrency
- One major risk for Bitcoin over the next couple of weeks
Recent days have not been supportive of Bitcoin as it’s slipped to the lowest point since November 2017. However, from a technical point of view bulls may hold out hope for a larger bounce in the nearest future as the price has reached its crucial technical demand zone. A closer look at the chart below allows us to identify this area from where the price bounced back substantially twice in the past. If history repeats itself buyers may still count on the same scenario this time round unless bears are capable of pushing the price below $5500.
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Bitcoin could be at a tipping point given the state of play at the daily chart. Source: xStation5
Where could the price go once a pullback begins? Well, the first reasonable target for buyers might be localized in the vicinity of $8900 followed by $9740, and then as high as $11750, but the last one seems to be a long way off at least for the time being. Anyway, a risk/reward ratio appears to be favourable for bulls, hence one cannot rule out their increased involvement in this market over the next days. Keep in mind that the cryptocurrency has been recently beleaguered on the back of hacks taking place in Asia baring its fragility, albeit Bitcoin holders did not have to incur losses.
After falling at the start of the year a Bitcoin daily transactions count has been hovering low. Source: bitcoin.com, XTB Research
The more often Bitcoin is used in daily transactions, the more demand for this virtual currency might be experienced. This relationship has well acted over the recent months, and the latest sluggish trend in terms of a count of daily transactions seems to explain the last Bitcoin price underperformance. Moreover, each trade is burdened with some risks, and this is the case here as well. Where do cryptocurrency pundits identify those risks?
According to Spencer Bogart, blockchain venture capitalist, Bitcoin price would fall yet more from the current levels. At the same time he keeps a bullish stance on virtual currencies in general. Why does Bogart think so? He told CNBC that "If we go back to the summer of 2017, when crypto prices were booming, there was about a 100, 200, maybe 300 new crypto hedge funds that were formed". He explained that many of these funds are "hitting their one-year lock up" implying that many of them may want to dump their crypto assets pushing prices substantially lower. Bogart said "That means forced selling on behalf of all of these new crypto funds that have popped up. I think that could take prices artificially lower". The key word here is ’artificially’ suggesting a slump could be just short-lived. He concluded his speech adding that many initial coin offerings in the market today are overvalued, while most people that are going to wait for lower prices (Bitcoin) will end up paying higher prices than today.
While Bitcoin seems to already be at a good place to consider entering a long, Ethereum trades still quite a long distance from its rock-bottom support. Source: xStation5
Disclaimer
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