by Jamie Holmes
Bitcoin has experienced a terrible first quarter in terms of price growth, down around 50 percent on 2018’s open. On March 29, the price slid below $7,500 revisiting lows from early March. With the price breaking below $7,799.96 on the Bitstamp exchange, the market is now devoid of any significant support until $5,920.72 (2018’s low) and $4,996.65 (23.6 percent Fibonacci support).
After a spectacular 2017, cryptocurrency markets has shedded more than 50 percent of its total value since the beginning of 2018, according to data from CoinMarketCap. With the tax deadline approaching in many countries, including the US and UK, many investors are said to be selling off their digital assets to cover their liabilities and that the bearish pressure could extend until mid-April.
The monthly chart for BTC-USD is displayed below, showing that a close below $7,799.96 for the March session will be considered bearish, and leave more room for the downside. So, by Sunday, April 1, if the price is lower than $7,799.96, expect further bearish sentiment to weigh on markets. The next Fibonacci support stands at $4,996.65.
The weekly chart seems to indicate we are in for a prolonged period of losses, similar to how the market behaved after bitcoin’s first run to $1,000 toward the end of 2013. The market lost steam, eventually bottoming out around $150 in January 2015. A similar move from the all-time high of $19,666 would place the bottom just below $3,000. Notice that the Awesome Oscillator on the weekly timeframe is moving closer to the zero threshold and the value of the bars has decreased substantially.
If the oscillator switches to the negative territory, which it looks like it will, then we are due for a long period of downward continuation. The Ichimoku cloud also points to uncertainty moving forward, as the cloud changed color to red then back to green again. Bulls would want to see the cloud remaining green and starting to fan upward, whereas bears should look for another change in color to red to confirm the beginning of a longer-term downtrend.
Since the February high at $11,780, we have only seen two near consecutive lower lows, suggesting we have plenty of room for further downside in the time dimension, with the current bearish move possibly continuing until mid-May to early June. Remember, the market is considered to be exhausted after seven to 11 near consecutive higher highs/lower lows. After we observe seven to 11 near consecutive lowers lows on the weekly timeframe, there is a greater likelihood of a reversal.
If we observe no new lower low by April 9, then the count is restarted and could be either bullish or bearish, depending on whether new highs or new lows are made. In short, the market must remain above $7,325.37 until April 9 for the current near consecutive count to be invalidated.
For the week beginning March 26, the lowest point has been $7,330 so far, just above the low from the session started March 12 ($7,325.37). A move below $7,325.37 should see a swift drop to the $6,000 handle, where fractal support lies at $5,920.72 (2018 low).