The Bitcoin price dropped below 6000 USD yesterday. A dreaded breach to the support BTCUSD was building in 2018. How bearish is this move for the long term uptrend on Bitcoin’s chart and what are the implications of such a move? Is our Bitcoin forecast for 2019 still accurate?
In full transparency we were caught by surprise on this development. Just a couple of days ago we observed this remarkable resilience in recent weeks when we wrote: Nasdaq Down, Bitcoin Up. Although Bitcoin and the tech sector saw a weakening correlation in recent weeks we saw the opposite happening yesterday: Nasdaq somehow stable, Bitcoin strongly down.
Note that as per our previous article, November is a very important month for Bitcoin’s price and might set the tone for the future direction of the Cryptocurrency market for 2019.
Bitcoin dropping below 6000 USD is not bearish long term, here is why
The chart below shows the following key points:
- The dominant trend is an uptrend. A sideways movement within an uptrend is likely to lead to a continuation of the dominant trend.
- The second support line in purple is the top from August 2017. If this level holds, This is great news for Bitcoin’s uptrend which is then likely to continue.
- If Bitcoin’s price drops below the 5000 support, what matters is that it recovers this support shortly after. Preferably within 24 to 48 hours.
In fact, the price could even touch 4000 USD in the next 48 hours, and we still would think Bitcoin price can recover. We have covered this in more details in a previous article: Bitcoin’s long term chart is bullish. The chart below was included back then and shows how Bitcoin’s price typically tends to revisit previous important breakout points. It also shows how almost every leg up was preceded by a brief break of support and a sharp selloff. The sell off should be quick however to not cause significant damage to the long term uptrend.
Note also how we had the 2nd support line highlighted back then, this move was to be expected and is still healthy. It is the 2nd blue line from the top and the first A annotation from the top as well.
Seen this way, a sharp and quick sell off followed by a massive volume would be the most bullish thing for Bitcoin price.