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Here’s What May Have Caused Bitcoin to Nosedive into Its Key Support

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  • Bitcoin saw a nosedive that caused it to erase all of yesterday afternoon’s gains as a result of the intense selling pressure around $13,800
  • This level marks the cryptocurrency’s 2019 highs, and a continued bout of trading at this level could confirm this as a local top
  • It is important to note that BTC has found support above $13,200, which is a positive sign suggesting that upside is imminent
  • The resistance here isn’t the only factor that may have sparked this selloff
  • Analysts are noting that a sudden surge in the U.S. Dollar’s value may have struck a blow to the cryptocurrency as well

Bitcoin and the aggregated cryptocurrency market have been caught within a strong uptrend throughout the past few days and weeks, but this momentum is now showing signs of faltering.

Overnight, BTC witnessed its first harsh rejection seen throughout the course of its recent uptrend.

This rejection caused its price to plummet from highs of $13,800 to lows of $13,200 before it was able to find some support that has since helped slow its descent.

Where it trends next will depend largely on whether or not it can continue holding above its near-term support.

Bitcoin Plunges from Highs as Momentum Falters

At the time of writing, Bitcoin is trading down just over 3% at its current price of $13,200. This marks a notable decline from its recent highs of $13,800 that were set yesterday afternoon.

So far, BTC’s local top coincides perfectly with its 2019 “blow-off top” set in the summer. The resistance here could prove to be significant in the near-term.

However, if broken, a move to fresh all-time highs of above $20,000 would be in the cards.

Here’s Another Reason Why BTC Is Plunging Today

The resistance at $13,800 isn’t the only reason why Bitcoin’s price plunged today.

Its latest decline also coincided closely with a rapid surge in the U.S. Dollar’s value, which BTC has been inversely correlated to as of late.

One analyst spoke about this, noting that it is now imperative that BTC holds above $13,250 – a level it is currently dipping beneath.

“Retrace here on BTC, as DXY is pushing upwards given the surrounding coronavirus pandemic fears. To avoid deviation above the range high, $13,250-13,325 has to hold for support. If that breaks, $12,700 seems next.”

Image Courtesy of Crypto Michaël. Source: BTCUSD on TradingView.

If the U.S. Dollar Currency Index (DXY) continues pushing higher, it may place further pressure on Bitcoin.

Featured image from Unsplash.
Charts from TradingView.





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PlanB feeling ‘uneasy’ as 41% of his followers tip $100K BTC won’t happen this year

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PlanB, the brainchild behind the Bitcoin stock-to-flow model, has revealed he is feeling “uneasy” about his renowned price predictions due to the recent downtrend in markets.

The stock-to-flow (S2F) model, which has predicted BTC prices with some degree of accuracy over the past two years, has been called into question by some of his followers in a recent Twitter poll.

The anonymous analyst surveyed his followers on June 21 asking them what price they thought BTC would reach by the end of the year. He used the results to compare them to a similar survey in March when market sentiment was overwhelmingly bullish.

Of the 124,595 respondents to the latest poll, 41% thought that BTC prices would remain below $100K by the end of the year, which would invalidate the S2F model. That’s two and a half times the 16% in the previous poll who thought the lazer eyes crowd would be disappointed this year.

PlanB who originally published the price predictor in March 2019, pinned a message admitting that even he feels a little “uneasy” when BTC prices deviate from the model. However, the analyst noted that the model had managed to hold previously in March 2019, again in March 2020 when the pandemic caused a global market meltdown, and once more in September 2020.

Preston Pysh, the founder of The Investors Podcast Network, commented that it was difficult for a model to account for a blizzard of bad news that has accelerated the market downturn.

“You mean your model doesn’t account for 40%+ of mining rigs getting banned & forced to turn-off & relocate to various parts of the world…and with no forward notice to companies/entitles for the extraordinary expense to their heavily denominated BTC treasuries/retained earnings.”

The model is a calculation of a ratio based on the existing supply of Bitcoin against how much is entering circulation. The scarcer the asset becomes due to the four-year halving cycles the higher the price. PlanB’s model predicts an average price of $288K over the next three years.

Related: $288K BTC price ‘still in play’ says PlanB as Bloomberg champions Bitcoin halving

At the time of writing, Bitcoin had gained 2.9% over the past 24 hours to trade at $34,450 according to CoinGecko. The asset is currently 45% down from its all-time high of $64,800 on April 14.





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Bitcoin in uptrend but BTC may never beat gold’s $10T market cap — ex-NYSE head

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Bitcoin (BTC) is on a “lower left to upper right trend” and its volatility should not scare investors, the former head of the New York Stock Exchange says.

In an interview with CNBC on June 23, Thomas Farley revealed long-term convictions about Bitcoin and dismissed concerns over BTC price losses.

Bitcoin: Going up, but not “up only”

Coming a day after CNBC pundit Jim Cramer admitted that he sold his Bitcoin stash, suggesting that BTC/USD was going as low as $10,000, Farley provided some much-needed mainstream bullishness.

“With respect to the recent price moves, I’m kind of sanguine about them — Bitcoin’s a very volatile asset class, in part because it’s a new asset class,” he told the network.

“I have no doubt it’ll go up, it’ll go down over the long term — I still think it’s a lower left to upper right trend and I think we’re going to see that play out over five years.”

With mining upheaval coming from China still on everyone’s lips, popular mainstream criticism of Bitcoin’s energy usage was also swiftly cast aside as a temporary issue.

“I think this kerfuffle is an interesting conversation, but by and large I think it’ll be resolved because I think the blockchain at its core adds to its efficiency and in fact will add to energy efficiency over time,” he continued.

Less convinced on gold. vs. Bitcoin

When it comes to Bitcoin as “digital gold,” however, Farley was more conservative in his predictions.

Now firmly beneath a trillion-dollar market cap, Bitcoin must transform in order to take on store-of-value safe-havens.

Related: Joining the ranks: Bitcoin’s correlation with gold and stocks is growing

“I think the upper bound for now is gold, which is about a $10 trillion market cap,” he added.

“In order for Bitcoin to one day exceed gold, it’ll have to be more of an accepted form of currency — I’m not sure, frankly, if it ever gets there.”

Proponents argue that Bitcoin, by its very nature, faces just a matter of time before eclipsing gold thanks to the latter’s ultimately infinite supply and inability to beat Bitcoin in all aspects of “money.”

The precious metal saw a major sell-off last week after comments on policy from the United States Federal Reserve.

To beat gold, Bitcoin would need to trade at more than $533,000 with the current supply.