Bitcoin Price Plunges 18% and Traders Fear Crushing Drop to $6,400
By CCN: In the past 12 hours, the bitcoin price dropped $7,432 on regulated crypto exchanges such as Bitstamp, recording a 19 percent drop in a span of nine days.
At its yearly peak recorded on May 29, the bitcoin price surged to as high as $9,096, nearly achieving a 140 percent year-to-date gain against the U.S. dollar.
Following the steep fall in the bitcoin price, several traders foresee the dominant crypto asset continuing its pullback in the near-term while remaining generally optimistic about the macro landscape of the crypto market.
Is a bigger bitcoin pullback likely?
DonAlt, a technical analyst who has consistently expressed his cautious stance towards the trend of bitcoin in the past week, said on May 30 that he has become net short on bitcoin for the first time in 2019.
At the time, the bitcoin price was hovering at around $9,000, subsequent to a two-month upside price movement with barely any correction.
Took both of these, my own stop loss is a little tighter (And R:R better) but I’d rather not disclose it, slippage is bad when people copy it. I’ll monitor the trade depending on the monthly close tomorrow and price movements. First-time net short BTC this year.
Very happy with having sold my spot exposure at 8700 now. Net short and still targeting the same area. Bounced higher than I expected but that’s what sensible stop losses are for. I’ll go net neutral at 6000 or if I get a bull setup – Until then a bear.
Since then, the bitcoin price has fallen by more than $1,000 and has shown a sign of a pullback which technical analysts have warned based on the historical performance of the asset.
Last month, cryptocurrency trader Josh Rager noted that throughout the past four years, bitcoin has regularly initiated 30 percent pullbacks following large extended rallies and a similar trend may be spotted in the near-term.
“BTC 30%+ pullback coming? Yes, eventually. If history repeats, there should be plenty of strong pullbacks on the way to next peak all-time high. There were at least nine 30%+ pullbacks from last cycle accumulation and uptrend Plenty of buying opportunities ahead, don’t let it shake you,” said Rager.
If bitcoin follows its historical price trend and initiates a 30 percent pullback from its 2019 peak at $9,096, it would result in a drop down to $6,400, a level which some traders like Bob Loukas have emphasized.
Longer term, if $BTC could see a retrace to $6,400 where the fireworks began in Oct 2018, it would be a healthy retrace and only fill the gap back to the 10-week moving average. From there new 2019 highs might take the rest of the year (hopefully).
It remains to be seen whether bitcoin would demonstrate a similar trend seen from 2016 to 2018 and experience a bigger pullback in the upcoming weeks but based on its staggering 140 percent year-to-date gain at its peak, a pullback could be healthy for the market.
Still macro bullish
Despite the possibility of a pullback, many traders remain optimistic on the macro landscape of the market.
As said by DonAlt, if an investor had bought bitcoin consistently on a day to day basis in the past year, the investor would have bought the asset at an average price of around $5,500, which at $9,096, the year’s peak, would have net investors substantial gains.
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