Bitcoin has seen a 5.31% price drop over the past 24 hours of trading as the cryptocurrency giant currently is exchanging hands at $6,969 (at the time of writing).
What’s been going on?
Investors have been panicking as an old unused, dormant wallet has recently been activated causing people to speculate what the intentions of the wallet owner are.
What’s so important about this wallet?
The wallet remained unused for over 4 years and was recently activated as a Reddit user named sick_silk picked up on the movement of coins. The wallet contains over 111,114 Bitcoin and Bitcoin Cash which today equates to over $800 million.
The sheer size of the wallet has caused speculators to worry about the intentions of the unknown owner. Some people believe it could be Dread Pirate Roberts, the creator of the notorious darknet market Silk Road, others believe it could be the custodian that is in charge of managing the MT Gox funds. However, some have even gone as far as saying that the wallet could belong to Satoshi himself.
Where is Bitcoin currently ranked?
Bitcoin is currently ranked at 1st position in terms of overall market cap across the entire industry. It has a total market cap value of $120 billion after suffering an 8.93% price drop over the past 90 trading days.
Let us continue to analyse price action over the short term and update our expected support and resistance areas.
BTC/USD – SHORT TERM – DAILY CHART
A brief catch up
In our last analysis, catch up here, price action had just broken up above our long term resistance level of the .786 Fibonacci Retracement priced at $6622.
We had stated that if the market could break up above this resistance level we could then expect price action to continue to make gains until meeting further resistance at the upper boundary of the descending wedge.
So what actually happened?
We can see that price action did indeed go on to make further gains, rising above resistance located at the short term .618 Fibonacci Retracement priced at $6848 to go on and break above the psychological round number handle of $7,000 followed by the .5 Fibonacci Retracement priced at $7165.
Price action then went on to meet resistance at the upper boundary of the long term descending wedge that we have been following over a long period of time. For a more detailed overview of this wedge formation, we recommend you catch up by reading our latest long term analysis sections located in our first article.
Where are we trading now?
We can see that after meeting resistance at the upper boundary of the descending wedge the market rolled over and dropped significantly. It is currently trading at support marked by a long term downside 1.272 Fibonacci Extension level (drawn in grey) priced at $6915.
Where can we go from here?
If the bearish momentum continues and pushes price action below the support at $6915 we can expect immediate support below to be located at the short term .618 Fibonacci Retracement level (drawn in red) priced at $6848.
Further support located below this level can be expected at our previously stated long term resistance level (now turned support) located at the long term .786 Fibonacci Retracement level priced at $6622.
If the bears push price action even further we can expect more support at the short term .786 Fibonacci Retracement level priced at $6398 followed by the .886 Fibonacci Retracement level at $6129.
The final levels of support we would like to highlight are located at the psychological round number handle of $6000 followed by the lower boundary of the descending wedge.
What if the bulls take control?
If the bulls can maintain price action above the $6916 handle and continue above the $7000 handle then we can expect immediate resistance to be located at the short term .5 Fibonacci Retracement handle of $7165.
Further resistance above this level will then be located at the upper boundary of the descending wedge once again.
What are the technical indicators reading?
Currently, the technical indicators within the market are starting to show slight favour toward the bears. The RSI has just penetrated below the 50 handle indicating that the bearish momentum may be beginning to take control once again.
If the RSI continues to trade below the 50 handle we can expect this market to continue to make further losses.
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