Bitcoin targets lower lows as markets continue down

Bitcoin fell from a high of $7,144 to a low of $6,900 in 20 minutes on Dec. 16 and closed at $6,924 yesterday, its lowest single-day close since May.

The recent decline is part of a month-long consolidation period, with BTC’s price action in check. Since Nov. 22, bitcoin has mostly traded between $6,920 and $7,800.

Lower volatility levels have the Bollinger Bands squeezed on BTC’s 1-day chart. This portends a period of intense volatility in the near future. The technical index estimates that a break below the lower range could trigger a sell-off that would take Bitcoin to lower lows. Conversely, a break above the band could send it surging.

Despite the uncertain outlook, the number of long Bitcoin contracts on Bitfinex has surged to a new all-time high, surpassing levels seen during the 2017 bull run.

Investors currently hold more than 44,500 long positions on the platform, worth more than $300 million. Longs hold 84.62% of all positions, which is clearly in favor of bulls. Meanwhile, short sellers hold 56.06% of the total Bitcoin position on BitMEX and 72.18% on Binance.

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According to the Crypto Fear and Greed Index (CFGI), market sentiment around Bitcoin has shown an "extreme" level of "fear" over the past month. Even some of the most prominent analysts in the industry have warned investors that there is a high chance of a price drop below $6,500.

For example, Peter Brandt, a 45-year veteran of Bitcoin trading, insisted that Bitcoin could fall to at least $5,324, triggering a "massive capitulation of crypto bulls." Likewise, former JPMorgan VP Tone Vays is “very confident” that BTC’s price will drop below $6,500 based on TD’s sequential indicator.

The CFGI fluctuated between 38 and 19, signaling "extreme fear" in the market, as investors feared a further economic downturn.

This technical indicator analyzes sentiment from different sources. These metrics include volatility, trading volume, social media, surveys and market dominance and combine them into one simple number. 0 means "extreme fear" and 100 means "extreme greed".

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IntoTheBlock said in a recent tweet that BTC is in a bearish posture based on its machine learning and statistical models.

For example, the "funding in/out" model considers the distribution of bitcoins among individual wallets based on current prices. According to this representation, there are 727,000 addresses with balances between $6,725 and $7,050, including 512,550 BTC. The low number of bitcoins held in this range suggests that its support is relatively weak.

The next significant support levels are around $4,465 and $6,725, where more than 3.4 million addresses hold 1.9 million BTC. However, there is significant resistance to the upside as 5.2 million addresses hold 3.3 million BTC at a price between $7,050 and $8,565.

The decline in the number of large deals valued at $100,000 or more also points to a lack of "confidence and deal activity". The number of large transactions fell 54% to 4,730 in the past 24 hours. The total value of deals plummeted from $3.3 billion to $2.68 billion.

uncertain future

As Bitcoin is targeting lower prices, well-known crypto investor Alistair Milne believes that Bitcoin's downtrend could be an ideal opportunity for outside investors to enter the Bitcoin market. The upcoming halving could be the catalyst for BTC's next major rally, taking BTC to new all-time highs.

Alistair Milne explained:

Still, Willy Woo, who is popular in the cryptocurrency industry, insists that Bitcoin's halving bear market could be a sign of serious investor disappointment.

It remains to be seen how Bitcoin will react as the next block reward reduction approaches. So far, it looks like it will end 2019 on a bearish note.