Bitcoin Fails to Jump $6,000, Top Analyst Warns Further Breakdown

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Bitcoin is in for more jump scares after having fallen by more than 50 percent this week.

With the expanse of Novel Coronavirus rippling through financial markets, bitcoin plunged from $10,000 in February to $3,858 as of Friday. On the same day, the cryptocurrency recovered to hit an intraday top at $5,995, almost failing to break above $6,000, a level that historically served it as strong support/resistance.

Entering the weekend session, bitcoin is now down by close to 4.5 percent. The cryptocurrency’s plunge appears as traditional markets take a break from their worst week since the 1987 crash. Bitcoin’s 24/7 open market leaves it under adequate risks of dipping further – also as traders feel uneasy to open fresh long positions near $6,000.

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BTC/USD back inside the medium-term falling channel | Source: TradingView.com, Coinbase

Technically, bitcoin’s latest price crash has brought it back inside its medium-term Descending Channel. The cryptocurrency tested the Support Trendline, bounced back and faced the $6,000-wall, and pulled back again, probably to hit the Support Trendline all over again.

A move of such extent means bitcoin could easily crash below $5,000 over the weekend. The technical scenario matches sentiment with the booming Coronavirus scare, leading investors to dump their open positions for cash liquidity. Bitcoin remains caught up in the global market rout.

Bitcoin Not Bottomed [Yet]

Tone Vays, a top analyst that predicted bitcoin’s breakdown months back, believes the cryptocurrency could fall below $5,000. He said markets on a whole continues to have problems that may lead bitcoin to establish new lows for 2020.

“I still think Bitcoin will fall below $5,000 one more time,” said Mr. Vays in a video blog. “I still think – as crazy as it is for me to say – I don’t think there’s been enough pain. I don’t think there’s been enough frustration.”

The trader added that he would sell his apartment if the price crashes anywhere in the range of $2,750-2,950, noting nevertheless that bitcoin’s bias will remain towards the upside.

“I can’t see Bitcoin going lower for those waiting on sub $2k,” he said.

$7,000 Price Target

A technical bounce from the Descending Channel Support, as discussed above, could lead bitcoin to retest $6,000 as its psychological resistance. A further break in the same direction and the cryptocurrency could jump by another $1,000 to close above $7,000. That is where the channel resistance is located.

Meanwhile, traders should watch for developments in the Coronavirus pandemic. The central banks are now injecting trillions of dollars into the banking system to safeguard their economies, creating artificial rebounds. But a real bounce could only come if the number of virus cases reduces, or a vaccine is found.

Bitcoin is likely to remain choppy and volatile through this so-called black swan phase.

     
 
 

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