As with any asset after a sharp fall, the willingness to anticipate the low point is legitimate … but complicated. The phrase “you don’t catch a falling knife” remains a famous phrase in financial markets. But for cryptocurrencies and especially the main one, Bitcoin, the knife no longer falls. But is this the signal for a low point? Bitcoin has been moving globally in a side zone of between $ 30,000 and $ 40,000 since mid-May, legitimately raising the question of the formation of a low area after falling 55% from an all-time high near $ 65,000.
At this stage of the chart formation, it is still difficult to conclude on a bottom. First, the asset concerned is less sensitive to bad news. Nothing forces investment in a consolidation channel to come out on top after a significant fall. Some sideways trend “continuation” patterns, that is, consolidation phases before a downtrend resumes. So more conditions are needed for the low point hypothesis to begin to emerge.
However, for several months the news flow has been particularly harmful to cryptocurrencies: hardening of the tone of regulators in several critical economic zones, including the United States, radical measures in China concerning the mining and promotion of cryptocurrencies, reflections or will focus on the part several central banks to develop their digital currencies, Elon Musk’s versatile position … it is clear that cryptocurrencies are eating their black bread.
The announcement this weekend by the FCA (British regulator) of the ban on the exercise of the Binance exchange platform in the United Kingdom is in itself bad news, not necessarily definitive, but lousy information nonetheless, but it did not cause a new sell-off on the cryptocurrency market, which also operates on weekends. The question now is whether all the bad news is in the current prices. The beginning of resilience?
It is too early to tell because it would take a combination of two factors to start identifying a potential market low point. First, reduced sensitivity to bad news, a return to the balance between good and bad news, and finally, a new rise in the importance of good news that would accompany the flows.
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Then the “visual” identification of the formation of a hollow. That is to say, increasingly high intermediate low points and a return to contact with the resistance zone of $ 40,000 tested three times during the rebounds that have tried to set in place since the fall severe month of May. A return above $ 40,000 and the ability to stay there for several days in a row would begin to reflect a form of market resilience, not necessarily the start of a new monstrous rally like the previous ones but more of stabilization with a drop in volatility which could reassure specific categories of investors and lead to new dynamic inflows.
A return above the slant through the lows of March and April would also participate in this process of a bottom formation. It is near this area that the last attempt at a rebound failed. A future crossing of this technical zone would mark the passage of a “psychological” course for speculators and investors.