Bitcoin price has plunged nearly 34 percent from its high of $13,851 formed on June 26, but it is still up almost 158 percent year-to-date. Among the top 3 coins: ETH and XRP, Bitcoin’s performance is unmatchable because ETH is up only 58.56 percent YTD while Ripple’s XRP is actually down -12.93 percent. It is broadly recognised that the crypto-winter has come to an end, but there is also another reality, this time the bull strength is largely for Bitcoin. This is mainly due to the reason that investors are playing safe and they do not want to be burnt like before when half of the space was covered by sham projects, and until this day, ETH is paying the price of this.
So the question is which way Bitcoin is going to move given that the price has retraced more than one third from its recent high?
In traditional markets, when the price retraces 10% from its previous high, it usually means correction, and a 20 percent drop stipulates that we are in a bear market. But, in crypto market similar principle cannot be applied and this is because traditional markets do not experience gains of 158 percent in six months.
In order to analyse this and find out if bulls have lost control of the price, one can use the golden principle: look at the current price movement and compare it with the major moving averages. However, before I do that, it is also important to keep an eye on the OTC market and see what kind of orders are there and most importantly, who are the buyers?
During the peak (when Bitcoin price touched $20,000), the premium for the Bitcoin price in the OTC market in Dubai was nearly 20% plus the spot price. Sticking to the same measure, the premium for Bitcoin price in the OTC market in Dubai is between 10-15% now. These unofficial OTC dealers say that the reason for the premium being too high is due to two reasons: firstly, there is a lot of optimism that something is about to come out of China with the respect to Bitcoin regulation. This is why Chinese buyers are happy to pay to the premium. Secondly, it is the US sanctions on different countries. This has brought more buyers in the market, clearly bullying behaviour doesn’t work.
In fact, something which needs some serious attention is that the governments which are suffering from the US sanctions such as Russia, Iran, North Korea (and many more) can easily form a collation together and firepower the bitcoin mining process by using the government electric power.
Now, going back to the topic of technical analysis, the price is in a constant battle with 50-day moving average, it dropped below this a few times in the past few days. It was the first time since February, that the price closed below this average on Wednesday. Lucky for the bulls, the price crossed above this moving average yesterday. This back an forth move tells me that the bears are trying their best to push the bitcoin price lower. In terms of support, I believe that the immediate support level is near the 100-day moving average which is trading at $7,364.
To conclude, it appears that the trading range is going to be between $7,364 to $14,000.
