Bitcoin (BTC) has seen an absolutely manic 24 hours of trading and price action. Over the course of a single day’s, $400 (USD) million worth of BitMEX positions were liquidated, Bakkt volume surged to fresh all-time highs, blockchain became a trending topic of discussion and even the Chinese President Xi Jinping, discussed the subject this week. Amongst other crazy events that managed to fall into the time span of a single day, BTC enthusiasts noted that the cryptocurrency charts have lost their momentum. BTC is now (at the time of writing) trading at $9,100 – a staggering $1,500 shy of the weekly high – and the bears seemed to have regained control of the market.

BTC saw a daily trading range of $7,300 to $10,600 — a jaw-dropping, whopping $3,300, around 40% if measured from the bottom. This surge represented the cryptocurrency’s third or fourth-largest daily gain in its history, depending on who you ask.

As of the time of writing, the leading cryptocurrency, largest by market share and trading volume, is resting on its laurels. The thing is, it doesn’t seem to be working. Since the daily peak of $10,600, the cryptocurrency has slumped by almost 14%, falling by $1,500 from said peak. Bitcoin is now trading for $9,100, and seems poised to breakdown further unless bulls step in.

$9,400 is purportedly a key resistance area that Bitcoin will need to close a daily candle above to verify that the bearish correction is most likely over and that continuation to $10,000 and beyond is possible.

Importantly, though, this pullback corroborates an analysis done by Nunya Bizniz, a popular analyst. He noted, as reported by NewsBTC, earlier on Saturday that a Bitcoin four-hour candle which reached as high as $10,600 on BitMEX, is a “perfected Tom Demark Sequential 9.”

Bizniz remarked that “a TD 9 typically indicates trend exhaustion,” implying that there may be some stagnation or a healthy pullback before a resumption of the uptrend.

The key points to take away for the average investor here is that the cryptocurrency market has been long overdue for an attempted break out. With $10,400 being a significant resistance level, a test of that price and a bounce-back to me is an indicator of healthy interest and renewed market dynamics in favor of the bulls. Looking at it from a macroeconomic and monetary policy perspective, given geopolitical and geo-economic shocks such as BREXIT and a trend of negative interest rates around the developed world, the cryptocurrency is poised and ready to rise to highs not seen in this calendar year. Whether that opportunity goes wanting, or is grasped by market participants is what remains to be seen.

Luqman Shaukat Private Client Advisor

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