I Really Didn’t Want To Write About Bitcoin Again

Cryptocurrency Snapshot

Source: Bloomberg

Today was another day for distribution in cryptos. Not included on the chart above is Dogecoin, which I consider ridiculous and is down about 40% this week. (Sorry folks, if it’s designed as a joke, I’m going to treat it that way). It really does appear that at least in the short-term, the Coinbase (COIN) listing was the peak of the market. As I said at the time, it was a milestone for the acceptance of bitcoin and other cryptocurrencies, but it should not have been considered a catalyst to the price of those currencies. 

So what comes next? For that, we’ll return to the trusty moving averages that have provided us guidance over the past few days. We can see from the chart below that shortly after switching from using the 10 and 30-day moving averages as support to the 50-day average that worked over the past six months, today we began trading around the 100-day moving average. We haven’t sniffed that 100-day moving average in months:

Bitcoin with 10, 30, 50, 100, and 200-day Moving Averages

(Click on image to enlarge)

Source: Bloomberg

We now need to see if we can bounce off the 100-day average, or whether that will prove to be resistance rather than support over the next few sessions. Remember, those include the weekends. Think about how we traded this week. Last weekend’s decline pierced the 50-day average, but after several tests of that previous support level, bitcoin failed to rise above it. If that moving average fails to provide support, it could get uglier.

This is the problem with any financial product that experienced a parabolic move. In those cases, the rise is so steep that it leaves longer-term trend lines in the dust. It can be wonderful if the product persists with its rally, but almost all rallies come to an eventual end. What we see here is that what might normally be considered some healthy consolidation has become a significant decline of over 20%.And 20% off of a $64,000 top is nearly $13,000.At today’s lows we were down over $17,000 from last week’s top. That’s staggering, and that’s why I keep feeling drawn to write about bitcoin. Let’s see if I need to do it again on Monday.

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