Bitcoin Price Outlook:
Bitcoin Price Plummets $2,000 in Minutes After Failing at Resistance
Shortly after the close of the US markets, Bitcoin plummeted roughly $2,000 in just 10 minutes as the cryptocurrency fluctuated between two Fibonacci levels. As I warned yesterday, the meteoric rise in price is reminiscent of the crypto mania in late 2017 that saw violent price swings as the coin climbed to $20,000. To that end, current price action is displaying serious signs of mania, as Bitcoin looks to outlast the recent gold price surge.
Bitcoin Price Chart: 1 – Minute Time Frame (June 26) (Chart 1)
The extreme price action has taken the Coinbase exchange offline, stalling orders in a day which experienced the highest trading volume through the exchange since November 20, 2018. Should the remaining orders process before the session ends, Wednesday trading volume could easily post the largest volume since February 6, 2018 when Bitcoin traded around $7,000. Still, the fear of missing out has caused retail traders to pour into the coin.
According to IG Client Sentiment Data, retail traders have only increased their exposure to the cryptocurrency despite the seemingly unsustainable climb. Retail trader data shows 72.1% of traders are net-long with the ratio of traders long to short at 2.58 to 1. The percentage of traders net-long is now its lowest since Feb 13 when Bitcoin traded near 3555.35. The number of traders net-long is 5.9% higher than yesterday and 28.2% higher from last week, while the number of traders net-short is 42.0% higher than yesterday and 64.0% higher from last week.
Bitcoin Price Chart: 1 – Hour Time Frame (June 2019) (Chart 2)
That said, traders hoping to ride the Bitcoin wave will look to negotiate the two Fib levels that resulted in today’s price action and will likely have to weather the resurgence of extreme volatility. For support, BTCUSD will enjoy the 50% Fib level around $11,500. The technical landmark stalled Wednesday’s plummet, which is an encouraging sign.
On the other hand, the 61.8% Fib at $13,500 is now the price to beat after it delivered a strong blow to bulls. Despite the precipitous 13% decline in the afternoon, Bitcoin is still on pace to close in the green after a quick rebound to $12,000. Across a broader timeframe, sentiment remains similarly intact with the coin boasting a 40% climb in June and a 210% gain in the year-to-date.
–Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX