The price of bitcoin dropping over 8 percent immediately after the digital currency’s all time high of $4,980. On September 4, bitcoin dropped to a low of $4,140. Speculators now believe the price drop today may be due to the recent announcement from the People’s Bank of China banning Initial Coin Offerings (ICO).
Bitcoin Markets Shave a Few Billion Again
There’s a bearish sentiment throughout bitcoin markets, just as we predicted would happen two days ago in our last price analysis. At press time, bitcoin’s price is trying to hold above the $4,150 territory as the currency’s value dropped another six legs down on Monday, September 4. Volume is still pretty decent with over $2.4B traded over the past 24-hours, but most of the action is stemming from this morning’s huge sell off. Bitcoin’s price dip caused the entire top eighteen cryptocurrency market capitalizations to drop, slashing prices from 5 to 34 percent, as most altcoins right now are in the red. This past week’s sell off has been the largest to date since mid-July, and we are seeing a similar 25-30 percent total correction during the bearish cycle.
Right now technical indicators show the Relative Strength Index (RSI) continues to head downwards, confirming that sellers right now have the upper hand. Of course, over the past three days, the two Simple Moving Averages (SMA) crossed hairs, and the long term 200 SMA is well above the short term 100 SMA. This again assures traders the storm is not yet over, and there is great resistance down the road. Looking at order books on some of the most popular exchanges, there are monstrous walls between the $4,600-5,000 positions. If support holds steady in the $4,160-4,200 area, bulls will have some work to do to eat through the next wave of resistance levels.
PBOC: ‘No ICOs For You’
Market sentiment seems to be geared towards the recent announcement from China’s central bank concerning ICOs. Cryptocurrency markets were already battling through a significant correction after bitcoin reached new price highs. So speculators think the recent banning of ICOs in China adds uncertainty to these types of markets. Otherwise, bitcoin is running its course through a typical 25-30 percent correction, after rocketing close to the $5K levels. Other spectators believe banks are spreading ‘fake news’ about bitcoin right now, because cryptocurrency popularity has risen exponentially. The UK publication the Mirror reports that certain banks are spreading these phony news stories to “restore the status quo.”
Right now bitcoin is holding above $4,150, so it may consolidate in this territory and push higher this week with some bounce back. Most of the top ten altcoins below bitcoin’s market cap lost larger percentages than bitcoin, which is likely tethered to the ICO news. This has pushed bitcoin’s market dominance up to 48.5 percent among the hundreds of altcoin market caps in existence. After the lull, bitcoin could follow its typical trend of moving up higher than before after a deep correction. So far this has been a consistent trend this year for bitcoin’s price, but we should never place all of our bets on this trend, because it may not be the case going forward.
Bear Scenario: Bitcoin markets could drop lower if the $4,100 floor collapses, bringing the price into the $4,000-3,900 territory. Right now big players have stepped off to the sidelines to catch more satoshis from weak hands and wait to choose a better entry point. Most technical indicators like the Stochastic, RSI, SMA, and order books are showing a strong negative sentiment at press time.
Bull Scenario: Right now, we are either going to consolidate in the $4,125-4,200 range, or we are seeing a short term bull trap at the moment. Bitcoin needs to break upper-level resistance past the $4,600 territory, but right now walls are considerably high. Of course topping the $5K range again is not out of the question, but it’s going to take some significant time to get there again.
Where do you see the price of bitcoin heading from here? Let us know in the comments below.