A barrage of negative stories has pushed the price of bitcoin to below $14,000 from a high of near $20,000.
This week, a South Korean exchange filed for bankruptcy following a hack reportedly from North Korea. In the U.S, Coinbase started an internal insider trading investigation.
In addition, during the week, some bitcoin holders tried to make purchases only to find ballooning transaction fees. These fees have increased recently because of crowding on the network.
Also, the much-awaited listing of bitcoin futures in the CME and CBOE showed an early struggle as demand was below expectations.
Other than the negative headlines, the sell-off could be because of traders taking year-end profits. This is not unique to the cryptocurrencies markets. At this time of the year, the volumes of financial assets reduce as traders take profits.
As seen above, the correction landed slightly above the 38.2% Fibonacci retracement level. If the pink line is crossed, expect the sell-off to continue to about $11,800 level, which forms the 50% retracement level. Also, the RSI is currently at 48, headed south and the ADX is at above 50 which could be an indication of more downside risks.
However, if you are bullish bitcoin, these short-term shocks should not scare you. In the past, similar corrections have happened. In the chart above, from 8th to 12th November, a similar correction happened when bitcoin fell from about $7,815 to $5,492. Also, similar corrections have happened before especially when bitcoin reached a major milestone or when major negative news were reported.
