- Bitcoin recovered from Asian lows, stopped at $3,800.
- McGlone from Bloomberg Intelligence predicts another wave of selling.
Bitcoin approached the lowest level of 2018 on Wednesday before recovering to$3,800 by the time of writing. Despite an upside correction, Bitcoin continues moving within a short-term bearish trend, clearly visible on intraday charts.
The area above the current price is packed by technical resistance levels, including SMA50 (1-hour) that stopped the most recent recovery attempt. The next hurdle is created by $3,900-$3,920 congestion zone and SMA100, 1-hour, followed by psychological $4,000.
From the longer-term perspective, the crypto-coin is also trapped in a bear trend. According to the Directional Movement Index that is used to define a trend on the market, the current sell-off is the strongest since the collapse registered in the middle of the year when BTC dropped from $9,300 to around $6,600.
Bloomberg Intelligence experts, including analyst Mike McGlone, believe that this technical setup implies more pain for cryptocurrencies. Bitcoin may low as much as 60% from its current level, collapsing to $1,500.
“There’s little to prevent fading Bitcoin prices from reaching the continuous mean of $1,500,” McGlone wrote.
He points out that investors rushed to the exit amid Bitcoin Cash hard fork, while the year-end sell-off for tax purposes increased the pressure.
“We’re at a classic psychological stage where the market is reversing the 2017 frenzy. The hard fork was a key trigger that signaled the technology is way too nascent. You had these dicey characters threatening to destroy each other and institutions said ’It might be best if we stay away from this for a while,” the expert explained in an interview with Bloomberg.
BTC/USD, 1-hour chart