Bitcoin price collapsed by almost 14% to 9,207 USD on Wednesday, following increased United States government attention on cryptocurrency and related phenomena, with comments by Treasury Secretary Steven Mnuchin, as well as the ongoing hearings on Facebook’s Libra closely watched by markets.
Alex Kruger, a popular economist, and market analyst indicated the government of the United States played a key role in regulating the Bitcoin markets. According to him, the concerns raised by President Trump and his Treasury Secretary over Bitcoin’s alleged involvement in funding terrorist activities and the highly uncertain nature of its market may have addressed the elephant in the room. Unfortunately, though, the crypto markets have reacted adversely to the whole situation. On the contrary, some industry experts also believe that the US government’s anti-crypto stance may have actually worked in the coin’s favor.
The cryptocurrency fell below 10,000 USD, breaking the important psychological support. Despite the fact that optimists are expecting for bulls to experience some form of short-term reprieve, historical trends and other key indicators predict a further unwinding of the cryptocurrency bull market.
Since passing above 13,000 USD for the second time this year last Wednesday, the cryptocurrency has been on a clearly downward-sloping trend. In fact, Bitcoin has lost 25% in the past week, falling to as low as 9,200 USD.
As Bitcoin’s previous parabolic trend appeared firmly over, now, analysts were preparing to brace for a further major correction which could erase even more of its advances. According to some traders, the correction could amount to 80% of the combined cryptocurrency market cap gains.
While the parabola in Bitcoin was subject to different renderings, the parabola in the total market cap chart was loud and clear. It can correct even 80%. Most of the damage of decline will occur to altcoins. Moreover, according to experts, the market structure is broken and lower-lows have been set on higher time frames.
Despite this, some analysts believe that the drop is most likely over. In fact, they drew attention to almost five signs why this may very well be the case, even if it sounds crazy.
Firstly, the one-day Relative Strength Index (RSI) and the Stochastic iteration of this indicator are at their lowest levels since at least February, entering the “oversold” range. The one-day Moving Average Convergence Divergence (MACD) has tapped the zero level, despite the fact that Bitcoin is in a raging bull market according to most analysis.
Also, the Elder’s Forse Index, an indicator meant to exhibit the strength of moves, is at its lowest since November 2018, and historical volatility is almost at 100%, implying a move to the upside to return volatility to levels deemed normal.
Crypto market recap
Following the freefall of Bitcoin price, the whole crypto market colored in red, pushing the cryptocurrency total market value to 249.029 billion USD.
Ethereum is down by 12.8% to 195.66 USD. The cryptocurrency topped near the 234.00 USD level and later started a fresh decrease. It broke the 218.00 USD, 205.00 USD and 200.00 USD support levels. Moreover, there was a close below 205.00 USD and the 25 simple moving average (30-min). It opened the doors for more losses below the 195.00 USD level. The price traded to a new multi-week low at 190.98 USD and it is currently correcting higher. The price might consolidate in the short term, but it could resume its decline below 190.00 USD.
Ripple’s XRP is down by 5.1% against the US Dollar and trading at 0.2970 USD, but gaining 10% versus Bitcoin.
Bitcoin Cash is down by 9.3% to 275.79 USD, while Bitcoin SV edged lower by 11.6% to 111.88 USD.
Litecoin is also significantly lower today, wiping out 12.4% of its price to 78.29 USD.
EOS is the worst performer today, losing more than 15% to 3.59 USD.
Among Top 20 cryptos, TRON, IOTA, and Dash are performing particularly bad with declines of more than 15%.