Since November 14th the price of bitcoin has been falling down from $6400 to almost $3700. That’s a decline of 42% in little over a week. Bitcoin even had a quarterly peak around $7775 on October 15th, which would mean that the price of bitcoin has halved. It’s very likely that the price of the crypto standard will fall even more, as it’s showing no strong signs of support. Where can we expect support?
Obviously this is not an easy answer. Compared with 2017 trading volumes are pretty low, which means that any rally is based on a pretty low amount of trades. Current volumes are probably about one third of the volume from last year.
Historically there should be support around $3600 and $3300 on the daily chart. Anything lower will move towards $2680, followed by $2200 and the magical $2000 of course.
For the road up, the long road up, there are dozens points of resistance bulls have to break through. This will only happen when optimism is going to replace the current pessimism on the market, or when bulls decide this is an amazing entry point and boost the price again.
On the short term these points of resistance are $3900 and $4000, followed by $4400, $4820 and far in the future $5600. These are measured on the daily chart based on historical data from the daily chart. In between these points, there will be enough further resistance as well.
But we were talking about the bitcoin bottom. Besides from the obvious statement that zero is the bottom, there has to be a point that the market decides that a certain value is the bare minimum for bitcoin. I believe this point to be somewhere around $2000-$2500.
Bitcoin has quite some horizontal movement between these price points, before the price boosted up and became the famous 2017 bull rally. It’s unlikely we will see a rally like that again, as people will be more cautious.
This $2000-$2500 pricing would place the maximum market cap of bitcoin somewhere between 42 and 52.5 billion dollars. Which seems reasonable for a product with much potential, but little usability outside its own internet bubble of existence. This market cap only has reason to increase when there’s usability and utility. Online retail and physical shops need to accept cryptocurrency as an optional payment method, even when it’s with an additional ‘crypto volatility fee’, or something along those lines.
Grab as much bitcoin as you can when the price is low, but remember that the price is likely to go a bit lower even more.
Also published on Medium.