The Next Leg Of The Bitcoin Crash Is Here

If it’s not the stock market crashing, it’s bitcoin.

When asset instruments crash, they go down in stages. Stages are price ranges when the asset stops and maintains a level of stability before they reprice again to another level. Many markets do this on the way up as well as down. Once a market has stabilized, the next break away from that range is highly likely to produce a sizeable move. For a trader this offers a market neutral signal that can be jumped on, long or short.

It is not a new phenomena or rocket science. Markets are consensus-seeking devices in the short term and that consensus is revealed in charts and gives a clear view of the past. The less efficient and perfect a market is, the more charts give a hint of the future and in my mind crypto is a very immature market filled with inefficiencies and imperfections. As such, charts of price action in bitcoin and other coins and tokens are a good tool in the alchemy of guessing what is going to unfold in this exciting and dangerous market.

So bitcoin looks to be breaking south for the next leg down. Forgive me for making such brave unhedged calls; I can’t be right all the time but as far as I’m concerned it’s highly likely we are about to drop quickly towards my $2,500 target.

Here is the chart as I write:

The Bitcoin chart shows the start of another drop

It is a high probability that this harmless-looking spike down is the start of another drop.

Let’s look closer:

A closer look at the Bitcoin chart
You can see volatility has exploded at the current level, a sign of increased uncertainty and a generally bearish state, but you can also see today’s action suggesting a drop out of this recent trend. If this fall continues then we are off towards the final capitulation.

When will we know we are at the final bottom? When everyone is screaming ‘the end of bitcoin’ and then after an extended period of basing.

This means we can wait and see. The end of this crash will look awful, the ends of crashes always do. That is yet to come but the next leg could be here.

 

Forbes

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya