Popular analyst Ran NeuNer has also put out a tweet, drawing attention to the fact that both bitcoin and gold moved lower following President Trump’s speech.
The number one cryptocurrency is currently trading at $7,910 – down 6.5 percent from the seven-week high of $8,463, according to CoinDesk’s Bitcoin Price Index (BPI).
- Bitcoin has pulled back from seven-week highs above $8,400, but the bullish breakout confirmed on Jan. 6 is still valid.
- It’s been a low-volume price drop and could be reversed.
- The bullish case would weaken if prices find acceptance under key support at $7,567.
Bitcoin has pulled back from multi-week highs, but is still hovering in bullish territory above key support near $7,600.
The pullback began during the U.S. trading hours on Wednesday with gold and other safe havens losing ground on easing of geopolitical tensions.
“Bitcoin’s price dropped down to $8,100 (from $8,300-$8,400 range) right as President Trump announced at 11 am ET that the U.S. will not escalate the conflict with Iran,” Hong Kim, co-founder and chief technology officer at Bitwise Asset Management tweeted Wednesday.
Bitcoin has moved in tandem with gold since Friday. The cryptocurrency turned higher from lows near $6,850 on Friday after the U.S. attacked Iran and clocked seven-week highs during the Asian trading hours on Wednesday. During the same time frame, the yellow metal rose from $1,530 to 6.5-year highs above $1,611.
So, it appears as though markets are beginning to treat the cryptocurrency as a haven asset, as noted by NeuNer.
That makes bitcoin vulnerable to a deeper pullback in gold, which is currently trading at $1,547 per Oz, representing a 4 percent drop from Wednesday’s high of $1,611.
The yellow metal could slip further, possibly dragging bitcoin lower, as the European equities (risk assets) are flashing green and the futures on the S&P 500 are adding 0.33 percent.
That said, bitcoin’s short-term bias will remain bullish as long as prices are holding above key support near $7,600.
Bitcoin is flashing red for the second day. However, the former resistance-turned-support of the inverse head-and-shoulders, currently at $7,567, is intact.
So, the bullish breakout confirmed on Jan. 6 is still valid and the path of least resistance remains to the higher side.
Markets usually crowd out weak hands (traders with limited ‘HODLing’ power) by revisiting former hurdle-turned-support before building on a major breakout.
Bitcoin jumped 5 percent on Tuesday, confirming an upside break of the six-month-long falling channel. The channel breakout signaled a revival of the bull market from lows near $4,100 seen in April 2019.
Therefore, the 6 percent pullback could be the market’s attempt to shake out weak bulls. Also, trading volumes have dropped over the last 18 hours.
The price decline is accompanied by a slide in volumes. The red bars, representing selling volumes, have been small compared to the green bars or buying volume witnessed earlier this week.
A low-volume price drop is often short-lived.
The probability of a slide to the crucial daily chart support of $7,567 would increase if prices find acceptance below the 100-hour average at $7,825 on the back of strong volumes.