Analysis: Here is why bitcoin dropped 15 percent during Wednesday

Analysis: Here is the explanation to why bitcoin dropped 15 percent on Wednesday.

Image source: Private / Shutterstock

Trijo News

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ANALYSIS. Despite the recent downturn in the markets, the situation for cryptocurrencies has never looked as exciting and good as it does right now, Dennis Sahlström, technical analyst, writes.

During yesterday (November 14), we saw bitcoin and the crypto market fall over $20 billion within an hour.

The price fell from $6,177 to $5,500. This is not a natural movement and nothing small investors or even big investors can do alone. However, this is not the first time it happens, it has happened many times before. I have marked some examples on the graph.

When there is high volume, long candlesticks and it all happens within a short period of time, that indicates that institutions manipulate the price.

Diagram view for bitcoin set on days. Image source: http://Tradingview.com

Diagram view for bitcoin set on days. Image source: Tradingview.com

Where is the next support?

When I am looking for support and resistance, I look for areas where buyers and sellers previously agreed on a price level.

The first level is around $5,550, where the price is currently. The second level is around $4,380, where there were support and resistance between June and September 2017. The third area is around $3,000, where there has been a strong support and resistance between May and September 2017.

Diagram view for bitcoin set on days. Image source: Tradingview.com

Diagram view for bitcoin set on days. Image source: Tradingview.com

Another reason that seems to be behind the price drop on the crypto markets is bitcoin cash’s hard fork. It is an update that will be done on the bitcoin cash network and that can end with two different blockchains.

What’s special about this update is that Craig Wright’s team and Roger Ver’s team more or less are trying to kill each other, a war known as the “war of the geeks”. It has been said that large amounts of bitcoin could be dumped to pay for “hired” miners.

“The situation for cryptocurrencies has never looked as exciting and good as it does right now”

Am I nervous because bitcoin is “dead”? Absolutely not! I mostly use technical analysis, but before I invest I want the fundamentals to be in place. In fact, the situation for cryptocurrencies has never looked as exciting and good as it does right now.

I could list all the reasons but instead, go and check out this Youtube clip to get a good insight into what’s happening on the market right now.

See this as a buying opportunity

If the price of bitcoin went down in connection to blockchain and cryptocurrencies were stopped being used, that would have been one thing. But now it’s just the opposite. I see this as a buying opportunity and think we are only in the starting pit for what’s going to happen.

I would like to point out that what I’m writing is just my opinions and no recommendations.

Dennis Sahlström technical analysis of cryptocurrencies.

Dennis Sahlström has been trading with securities since 2012 and with cryptocurrencies since 2017. Now, he runs an education platform about investment strategies for cryptocurrencies. You can contact him here.

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