Bitcoin’s price has broken the week-long consolidation in favor of bears, amidst pressure to continue rallying upwards against other major currencies like the US dollar. The market opened the week, January 20, 2020, with a huge market gap, which many analysts saw as a confirmation of a direct bull rally. For the last three days, the market played cool at a zone between $8,730 and $8,540, with both buyers and sellers in a tug of war.
During the early Asian market, on January 23, 2020, the market correction in the upward direction dipped down with a strong trend indicating a further drop. With the European market opening late in the day, Bitcoin continued the downtrend.
A lot of speculations are looming on the correction and the maximum it will hit with the buyers still holding their coins in the hope of the market favoring their forecast. However, on the higher timeframe, the uptrend channel still seems valid, supported by the fact that the market is making higher lows and higher- highs.
Checking the RSI-Indicator, the market is overbought, in addition to it having gone beyond the middle line, which indicates a falling trend.
Why the Sudden Breakout
With Bitcoin’s high volatility and no regulations, there are several possible reasons which might be leading to the negative breakout.
With China being a huge market player, where most Bitcoin holders are, according to the recent blockchain study. Any political or social disturbance would definitely lead to a sudden Bitcoin price movement.
One, there is China’s New Year festivals, as from January 25, where spending habits experience a sharp uptick. This would definitely call for the Bitcoin holders to dispose of their coins in need of fast cash to spend.
The other major reason that might explain the downtrend on the coin is the recent development of the coronavirus outbreak, which saw a lot of fears spread throughout the world. With the lockdown on major towns and services in China, the forex market is experiencing a hard time coping with the challenges.
What Next Now?
It is still early to make hasty decisions based on what the market is currently executing. With most world banks across the globe exploring the utilization of digital currencies, in addition to the gold rush accumulation. The fiat currency continues to lose faith among many.
The coin is still favored as a safe-haven, seeing many countries’ interest rate is headed to negative if not zero.
A game of patience will do everyone best to see if it is an uptrend pull-back or a market reversal.