Cryptocurrency market daily performance. Source: Coin360
Over the past week, BTC/USD has faced a slow grind down to the $8,000 price level. Now, Bitcoin also broke below its 0.786 Fibonacci retracement level as well — its last major level before a confirmed full retrace of the Oct. 25 rally to $10,500.
After a short bounce, Bitcoin has bounced back to around $7,600 at press time.
“China bans Bitcoin” FUD works again
As Cointelegraph reported, rumors of Chinese authorities raiding Binance’s Shanghai offices were likely also responsible for the drop. However, the exchange said that they had not received a notice from Chinese authorities, which required Binance to detail its activities.
Specifically, a Binance spokesperson denied the rumors, saying:
“Binance has no fixed offices in Shanghai or China, so it makes no sense that police raided on any offices and shut them down. [...] There has been a recent spike in the number of negative articles and activities against Binance in China. We wouldn't delve too much into what causes this, because we prefer to continue BUIDLing our solutions.”
Bitcoin price fully retraces October rally
Nevertheless, after several days of choppy price action, BTC/USD finally posted a decisive drop below $8,000 falling under its 0.786 Fibonacci retracement level at $7,870 and plummeting all the way down to $7,390.
This was the level of consolidation prior to the historic 42% price rise on Oct. 25.
BTC USD daily chart. Source: TradingView
If Bitcoin falls further below $7,307, it may indicate its bullish swing up to $10,500 on Oct. 25 was a fluke, resulting in net sideways action for the past month. Furthermore, a bearish outlook might even see BTC’s recent $10,500 upswing as a significant bullish correction albeit in a continuation of a general downward trend.
On a bullish note, however, Bitcoin did not yet breach the previous low and bounced with a fair bit of strength from $7,390 up to $7,640.
Market analyst Keith Wareing meanwhile anticipated the drop, shorting BTC to the $7.4K level, and then immediately taking a long position.
“Decided that shorting to $7,350 was the logical move after the support on the Bollinger Bands was broken on all major time frames,” said Wareing. “If $7350 wasn’t to hold, Willy Woo and Tone Vays would be right, and as there are no pigs in the sky or ice in hell, I knew it was the bottom.”
If Bitcoin continues to tumble, however, $7,230 may provide a bit of support. Although beyond that, not much buying strength exists before the $6K range.
If $6,000 breaks as easily as it did to the upside in May, however, significant support exists between $5,800 and $5,000 as the market spent considerable time in this region earlier in 2019.
Additionally, the 200-week moving average (MA) now sits at $4,890. At the bottom of the last bear market in 2018, Bitcoin’s 200-week MA acted as strong support near $3,200. BTC has not closed below its 200-week MA since 2015.
Tezos stands out
XTZ USD daily chart. Source: TradingView
Tezos (XTZ), on the other hand, was the only standout today gaining on news that the French army is using the Tezos blockchain. But the rally didn’t last long. The staking-based digital asset saw a high of $1.30 before dropping down to $1.19 at press time.