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Traders Expect Bitcoin Price to Go Lower Than $3,000 Level as a Short-term Downtrend

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Bhaswati Sarkar
Bhaswati Sarkar
She is a feminist pursuing a M.A. degree. She likes to lose herself in music and daydreams quite often. Travelling excites her and photography is her passion- nature is her favorite subject. Writing is cathartic for her. A happy-go-lucky kind of person, she tries to remain calm and serene through daily life.

January 11, 2019, witnessed an intense sell-off in the crypto market when the Bitcoin price dropped below the $3,600 mark and major digital assets recorded drops in the range of 10 to 15 percent. With the BTC price decline from $4,036 to $3,503, traders expect the dominant cryptocurrency to fall below key support levels, possibly below $3,300.

Preceding the Christmas Eve of 2018, some investors in the cryptocurrency market demonstrated a renewed optimism toward a short-term trend reversal of Bitcoin and other major cryptocurrencies. This was major because of the strong recovery of BTC from its 12-month low at $3,122, when within a three-day span, December 17-20, the Bitcoin price increased from $3,181 to $4,172, by more than 31 percent. It is thought that the short-term rally Bitcoin experienced from December 17 to 20 was essentially a corrective rally triggered by oversold conditions.

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Su Zhu, an FX hedge fund CEO, had mentioned the boost of buying walls on leading fiat-to-crypto exchanges, including Coinbase and Bitstamp, in the range of $3,200-$3,300, following which investors began accumulating the asset at a low price range.

10% down from here ($3,300), buy walls on @Coinbase are now the largest (in BTC notional ) since mid-2015. Similar for Bitstamp. To break lower will require filling these fiat-backed bids. Either 1) more BTC borrow to come online 2) KYC-able off-ramp selling. Derivatives selling will just lead to funding becoming very negative as it has been. – Su Zhu, an FX hedge fund CEO

Given the lack of momentum of the asset throughout late December and early January, it was reasonably evident that the probability of a proper short-term rally was low.

Donald, a cryptocurrency investor and a technical analyst, believes that after BTC fell below $3,600, it can be expected to drop to $3,350 as a support level at $3,600 were cleanly breached: “Clean break of support. If we do retest $3,700 on the weekend and don’t manage to close above there I’m expecting $3,350. I’ll most likely close my hedge short there. This is the reason why you shouldn’t trust mismatched patterns – it’s an easy way to get rekt.”

Along with the drop in Bitcoin by more than 10 percent in a 48-hour period, other major cryptocurrencies like Ethereum, Bitcoin Cash, and the like recorded 15 percent falls against the U.S. dollar. Furthermore, Ethereum was expected to maintain a positive upward price movement in anticipation of its Constantinople hard fork on January 14 but was ultimately outdone by Ripple.

Even though the daily volume of Bitcoin and Ethereum still remains relatively high, the volume of the cryptocurrency market since January 10, is lingering at $15 billion, down $7 billion. On that note, a short-term drop should be expected in the scenario of crypto assets continuing to plummet without meaningful volume and strong sell pressure.

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