After last night’s drop, hypotheses are beginning to circulate suggesting that the risks of further declines in Bitcoin’s price have increased.
The situation is actually complex and uncertain, so it is necessary to proceed with caution with this type of analysis.
However, the risks that the situation will remain challenging for a while are evident.
Summary
The Challenging Situation
Yesterday, after the US markets closed, American President Donald Trump delivered a speech to the nation.
The main topic was the war in Iran, and specifically, one of the things he said frightened the markets.
In fact, while many were expecting some indication of a possible end to the conflict in the near future, Trump instead stated that he intends to continue for at least another two or three weeks.
Although the stock exchanges were closed, index futures were still being traded, as these are traded virtually continuously.
Specifically, the futures on the main U.S. stock market index, the S&P 500, suddenly recorded a 2.4% drop in just over half an hour. In the following hours, however, it extended the decline to 3.5%, before slightly rebounding and reducing it to 2.8%.
It is worth noting that yesterday the S&P 500 trading session closed with an encouraging +0.7%, precisely because the markets were expecting something entirely different from that speech.
Donald Trump once again surprised everyone, and once again poured fuel on the fire, worsening the situation of the markets.
Bitcoin
The price of Bitcoin has followed an absolutely mirrored trend.
Last night it reached $68,600 before Trump’s speech, but during the night it first dropped to $67,100, and then even to $66,200.
The small subsequent rebound brought it back to around $66,400, but further declines cannot be ruled out.
The point is that the macro situation, closely tied to the war in Iran, could remain critical for at least another two or three weeks, and it is not even certain that it can truly recover in a short time thereafter.
To be honest, though, yesterday American whales already seemed to be sniffing something out.
In fact, although they had bought Bitcoin at a price close to $68,000 in the previous hours, during the day they had essentially stopped buying, instead alternating between purchases and sales.
In other words, while retail investors seemed quite convinced that indeed that speech could have positive consequences on the markets, the whales had instead begun to price in uncertainty. They didn’t know exactly how it would turn out, otherwise they would have sold more, but they sensed that things might not go as well as the retail investors hoped.
Additionally, starting from last Friday, the US government drained a substantial $70 billion from the markets, after having released $86 billion in the previous three days. Certainly, this drainage has not aided the financial markets, given that the liquidity circulating in financial markets now plays an increasingly important role in price dynamics.
The Forecasts
Although the situation remains highly uncertain, some forecasts are starting to circulate.
The issue is that the price of Bitcoin is unable to recover and maintain the psychological level of $70,000.
There is a support level around $63,000, which is currently holding up very well, but repeated declines could also lead it to test that support, with no guarantee that it will necessarily continue to hold.
To be honest, the main resistance still seems to be positioned at $80,000, but since in recent weeks BTC has not even managed to approach it, at this moment such resistance is effectively irrelevant.
Adding to this is a selling pressure that has increased in the last few hours, while buying pressure has remained low. In fact, the significant buying pressure usually generated by whales is almost completely absent, as they are currently cautious and prefer not to overexpose themselves.
It should not be forgotten that last week they bought at around $66,000, only to sell at the beginning of this week at around $68,000.
Between Tuesday and Wednesday, they seemed willing to buy back at $68,000, but yesterday at some point they realized the uncertainty was too high and stopped buying.
In light of all this, it can be said that, in the absence of strong buying pressure generated by whales, the price of Bitcoin could fall further if selling pressure were to increase again. Now, after the drop caused by Trump’s words, the selling pressure has returned more or less to the same levels as the overall buying pressure, but there is no guarantee that things will remain this way for long.
However, if at some point the whales were to start buying en masse again, even with the aim of cashing in at higher prices in the coming days, the current bearish short-term forecasts could reverse.
What has been almost entirely absent for several weeks now is the buying pressure generated by whales looking to hold Bitcoin, and this does not bode well for the medium term.
