TL;DR back above $8k but $8,500 will be the acid test.
Last week ended with further falls, and bitcoin came close to putting in a lower low. It rallied just in time, leaving the prior low of $7,715 (Bitstamp) intact.
Bullish divergence was also evident on the daily chart; the RSI had been moving up even as the price drifted lower, indicating that bears were exhausted. A correction upwards was due, and that’s just what happened. Bitcoin rallied back above $8,000 and, at the time of writing, is trading around $8,200.
While this is encouraging, it does not fundamentally change the picture yet. Bitcoin is still trading below the 200 daily MA, and below the 50% fib level from its parabolic rise earlier this year. We are watching the $8,500 level closely, since that’s what BTC needs to overcome to have a shot at restarting the bull run.
Meanwhile to the downside, we still haven’t broken $7,700 to drop further into the zone many analysts were predicting: the 0.618 fib level, which happens to coincide with the CME futures gap, both of which present reasonable targets for this leg of the market. That zone lies around $7,200–7,500.
Consequently, we expect a significant move in the coming days and possibly weeks: either $1,000 lower, to support, or back up above that 200 DMA.
One thing you may have heard many traders discussing is the Death Cross that is looming for bitcoin. This is when the 50 daily moving average crosses down over the 200. It’s viewed as a classic bear signal. This is almost definitely going to happen for bitcoin over the coming month or so. In this instance, though, we doubt this will be significant for bitcoin. We’ll explore more why tomorrow.
In other news, a class action lawsuit has just been filed against Bitfinex and Tether by a New York-based legal firm for market manipulation and a host of other offences. The damages are claimed at over $1 trillion. Roche Freedman claim that Tether and Bitfinex used their monopoly on the stablecoin market to create a huge boom-and-bust cycle, defrauding investors along the way. They allege this was possible because USDT was not 1:1 backed by real dollars, effectively allowing Tether to mint their own currency, pump the market with fake cash, then sell at the top on their own exchange.
We have posited similar frauds here in the past, but believe the evidence points in a slightly different direction — that the fake dollars were used to buy bitcoin that was then sold on other exchanges, retrospectively backing the Tethers created.
Article by Moonhub
