Bitcoin: indeed oversold
There has been a significant downside pressure on BTC during the previous week, which pulled the crypto market to the down side. As of Friday, BTC reached its lowest weekly level at 54.0K, however, most of the time, the coin was traded at 56K - 57K range. There are several reasons for such a strong drop in value.
The crypto exchanger Mt. Gox announced that it will distribute to its clients the amount of 143.000 BTC. This puts initially the first significant pressure on BTC. The second reason was a huge selling of BTC made by crypto miners, which traditionally reaches its maximum during this period of time. Within the last four weeks, estimated sales reached around 40.000 BTC, worth around $2.5 billion. The third effect came from exchange traded funds. Namely, due to decrease in price of BTC during the previous period, there has been a significant outflow of funds from ETFs, where these ETFs became net sellers, instead of net buyers. In addition to all of that, there was an announcement from the German government on the sale of BTC which they were previously holding in the amount of around $2.8 billion. Such a strong offer side on the market and a further drop in value of BTC initiated margin calls in leveraged positions, pushing further the price of BTC to the downside.
As of Friday, the RSI reached a clear oversold market side. This indicates a potential that a short term reversal might come in the future period. Moving average of 50 days started a modest convergence toward the MA200 counterpart, but the potential cross is still not in store.
After such a strong push in price to the downside, some short recovery might be expected. It already started during Saturday trading session, but moves modestly toward the level of 58K. The market is still waging which side to trade, and whether it is now a good time for a purchase of BTC? Current charts are indicating that BTC still hasn't exhausted the downside pressure. But, on a positive side, this pressure might ease in the coming period. The potential for the upside is also indicated. Still, for the week ahead, it might expect some BTC`s recovery. There is modest probability that the 60K resistance line might be tested. Higher levels will strongly depend on a demand for BTC at this moment.
The crypto exchanger Mt. Gox announced that it will distribute to its clients the amount of 143.000 BTC. This puts initially the first significant pressure on BTC. The second reason was a huge selling of BTC made by crypto miners, which traditionally reaches its maximum during this period of time. Within the last four weeks, estimated sales reached around 40.000 BTC, worth around $2.5 billion. The third effect came from exchange traded funds. Namely, due to decrease in price of BTC during the previous period, there has been a significant outflow of funds from ETFs, where these ETFs became net sellers, instead of net buyers. In addition to all of that, there was an announcement from the German government on the sale of BTC which they were previously holding in the amount of around $2.8 billion. Such a strong offer side on the market and a further drop in value of BTC initiated margin calls in leveraged positions, pushing further the price of BTC to the downside.
As of Friday, the RSI reached a clear oversold market side. This indicates a potential that a short term reversal might come in the future period. Moving average of 50 days started a modest convergence toward the MA200 counterpart, but the potential cross is still not in store.
After such a strong push in price to the downside, some short recovery might be expected. It already started during Saturday trading session, but moves modestly toward the level of 58K. The market is still waging which side to trade, and whether it is now a good time for a purchase of BTC? Current charts are indicating that BTC still hasn't exhausted the downside pressure. But, on a positive side, this pressure might ease in the coming period. The potential for the upside is also indicated. Still, for the week ahead, it might expect some BTC`s recovery. There is modest probability that the 60K resistance line might be tested. Higher levels will strongly depend on a demand for BTC at this moment.
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