The selling on Friday was brutal in the Bitcoin markets, but in general we’ve seen the market has drifted a bit lower over the last several sessions, and I now think that a breakdown below the bottom of this candlestick probably has Bitcoin looking towards the $10,000 level. This candle is very ugly, and it is breaking the bottom of a hammer, and I think we are starting to see a shift in psychology. While I believe $10,000 will be important, as it is not only a large, round, psychologically significant number, but it is also where the uptrend line coincides with the market. If we were to break down below the $10,000 region for any length of time, that could be catastrophic and send Bitcoin down to $7500, and then possibly $5000.
BTC/USD Video 25.12.17
If we see a bounce from here, that of course would continue the “buy on the dip” mentality, but you can see that the volumes have picked up, as we have gotten very noisy. Bitcoin is probably the market that can survive the most type of moves like this, but I think a lot of retail traders just got their clocks cleaned. I suspect that we are going to see a lot of volatility over the next several weeks, as volumes dry up, but ironically, there was heavy volume to the downside over the course of Friday. I think that the market will continue to be very difficult to hang onto, and I also believe that the market will continue to be prone to these massive selloffs. Now that institutional investors are jumping into the market space, you’re going to see a lot more of this type of negativity occasionally.