Bitcoin bears are on fire, the price of Bitcoin is down more than 10% in the past 2 days. Bears take control of the market and dump the price on the weekend when the volume is low. Bitcoin is now trading below the $8000 mark and this is not a good sign for the market.
Does the pre-halving rally over? or it is just a healthy correction?
Bitcoin has hit 2 months low after the quick rally to $10,500 in February. This drop is affected by the DOW, S&P 500 and oil futures market crash, investors are in fear because of the Coronavirus shutdown. The global financial markets losing double digits in the past weeks.
Coronavirus Fear in the Global Investors
Dow futures dropped more than 1,200 points (4.6%), S&P 500 futures fell 4.89% and Brent Crude fell 31%. The crude oil market drop because of the increasing tension between Saudi Arabia and Russia as the OPEC members debate whether to cut the oil production or not. The crude oil market fell by 31% biggest loss since 1991.
Saudi Arabia has reported having finalized plans to increase production without the knowledge of Russia and this is creating fear among the investors that a price war will start.
Italy has been hit hard by the COVID-19. The number of infected people is increasing exponentially and 16 million people are now severely restricted in their movement as bars, schools, sports competitions and travel is shut down.
Bitcoin price also follows the crude oil and stock market and at the time of publishing is trading below $7800.
$192 Million Bitcoin Position Liquidated
The recent dump of Bitcoin is not good for bulls. According to the data, $192 million positions liquidated today. The liquidated positions make a new record of 2020. A total of $2.3 Billion positions are liquidated on Bitmex year to date (YTD) including both long and short positions.
The fear and greed index of Bitcoin hit an all-time low since December 2019. The fear and greed index shows the sentiments of the Bitcoin market. If the fear and greed index is near to 0 that means the investors are in extreme fear and will not invest in the market. If the fear and greed index is near to 100 that means the investors are in greed and will invest more money to make profits.
Huge CME Gap
The futures market of CME only opens for 5 days a week (Mon to Fri). The market closed on Friday and open on Monday but all other cryptocurrency exchanges open for trading. Basically, on weekends the trading volume is low than other days and some big bear whales take advantage of this condition. The price is dumped on weekends and when the CME market opens it opens with a huge gap of $900.
The CME gaps have a very interesting topic among the cryptocurrency traders. Whenever there is a CME gap the bitcoin price will try to fill hit by a pump or dump. So there is a 90% possibility that Bitcoin will try to fill the CME gap of $9100 in the next upcoming months.
Head and Shoulder Pattern Complete
On the daily timeframe chart, there is a very clear head and shoulder pattern. The pattern is shown in the image below. You can see that the right shoulder and the left shoulder is almost equal, the bitcoin price is now at the closing of the left shoulder.
The yellow zones in the chart are the major support zones for Bitcoin. The first support zone is $7400-$7600 zones if bitcoin price is able to hold these zones the market will try to test the 200 daily MA that is now around $8670.
The next major support zone is $6430-$6600. This zone was tested two times before the start of the mini bull run of bitcoin. Bitcoin must hold these level to remain bullish if these zones are broken the price will test the $6000 and $5500 support zones.
The fundamentals are also strong, bitcoin halving is coming in the next 60 days (possibly to happen between 8-12 May 2020). Halving is one of the most bullish event for the cryptocurrency market. The mining hash rate is continuously increasing means the network is becoming strong daily.
The market sentiments are still positive and there is a lot of good news coming from big countries. The Supreme court of India has uplifted the Reserve Bank of India (RBI) ban and now Indian user can buy bitcoin with their bank accounts. South Korea has fully legalised the use and trading of cryptocurrencies. France government now accept bitcoin as a currency. According to the data, there is a lot of new investors are coming in the cryptocurrency market.