After rallying to $8,500, Bitcoin (BTC) prices pulled back to $7,500.
But that was to be expected with South Korea threatening potential tax crackdowns.
However, the pullback may be short-lived, in our opinion.
Overbought at double-top resistance dating back to May 2018, a minor correction was overdue. Things may have also made a turn for the worse with a downside break of the 20-day moving average on a three-month chart.
Still, while the tide appears to have turned in favor of the bears, it’s temporary.
Technically, the uptrend is strong
The uptrend is still intact, per its 20-day and 50-day moving averages.
In May 2018, the 20 crossed below the 50, leading to a substantial decline from $9,500 to less than $6,000. However, once the 20 crossed back above the 50 in June 2018, Bitcoin prices began to rally higher.
Bitcoin prices also appear to have caught support at its lower Bollinger Band (2,20). In fact, if we look at the last three months of trading, nearly 80% of the time, it’s bounced off that lower band. Interesting to note with bands, cryptocurrency prices tend to stay within the upper and lower bands. In doing so, the bands can help traders understand where prices may be bottoming or topping out.
In addition, a reversal doji candlestick was spotted at bottom of trend, indicating indecision among the bulls and bears. Typically, these can be an indication of near-term trend change when found at a top or bottom.
We must also be mindful of potential news that could propel the coin higher, too.
For one, institutional investors appear to be coming on board.
Two, the U.S. SEC may soon approve a Bitcoin ETF, which could really open the floodgates of opportunity. In fact, BitMEX CEO Arthur Hayes notes that such a fund will produce a significant flow of capital influx from retail investors.
“Retail traders do not want to have to worry about securing a Bitcoin wallet, where do they buy it from, using the different exchanges. So if all they have to do is to click on their E*Trade, Scottrade, Interactive Brokers, 401k (etc.), to buy an ETF that gives them exposure to Bitcoin, but not allow them to experience the risks of holding it, that is a very powerful way for them (retail investors) to get involved.”
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