BITCOIN: Most popular cryptocurrency facing uncertain Christmas

2 min

11 shares, 67 points
BITCOIN: Most popular cryptocurrency facing uncertain Christmas 1

Where the car stops for the next ride is anyone’s guess as two factors play havoc on the tracks – inexplicable volatility and poor trading volume. However, there is a turning point that could send the price of BTC crashing over Christmas as a complex trading pattern looms into view. Many cryptocurrency traders have, over several weeks been hedging their bets on bitcoin rising in value by the end of the year. But a lack of trading volume, driven by an unenthusiastic market addled with apathy, means these bets on bitcoin’s future may be wildly misplaced.

And it’s a lot to misplace. On trading platform Bitfinex alone, these ‘long positions’ add up to an eye-watering 43,300 BTC – currently worth more than $ 303 million.

The timeframe of the bets essentially means that, over the coming days, traders with wagers banking on a rise will be rushing to cut their losses and panic sell. This fire sale alone could send the price free-falling out of control – as has been witnessed before.

A similar pattern 18 months ago saw BTC stumble by 30 percent, before dropping almost 70 percent in value in the ensuing months.

This crippling effect could very easily occur again – particularly when analysing the last few weeks on the bitcoin charts which have shown little in the way of a bullish fight to prevent the relentless downward pressure of a bear market.

It was almost a month ago when bitcoin suddenly dropped below $ 8,000 after looking like it was gearing up for a strong finish to a turbulent year. Many traders had seen the fall as a temporary bump in the road – hence the swathes of long positions – and expected the value of the 11-year-old digital asset to make a strong comeback.

That comeback has been more or less none existent, with only a handful of woefully weak efforts to push back above $ 7,500 or even $ 7,200.

Last night, any shadow of momentum left in those efforts evaporated as BTC slipped under the $ 7k line in what felt like a significant step towards a potential market downturn.

A steep fall was arrested at around $ 6,800 – another historical sticking point – but how long it can cling to this level could be critical to predicting which path the price will take.

In the past, declining steps have seen the market test the lower branches of support at around $ 5,850 and even $ 3,200 in a similar situation.

Given the curious nature of a seemingly always-mischievous market, it would be no surprise whatsoever to see it suddenly rocket for no apparent reason back above $ 8,000.

Mischief aside, the smart thinking here would lean towards a test of $ 6,000 being the likely backdrop to this entertaining seasonal pantomime.

Coin Rivet is a website bringing news, information, analysis, opinion and insight from the fast-moving blockchain world.

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