Cryptocurrencies went through a very harsh week in mid-November, as a significant crash took place.
Cryptocurrencies went through a very harsh week in mid-November, as a significant crash took place, leading market viewers and investors in more doubt, over the digital coins future stability.
Bitcoin quickly set the selling trend, and a chained reaction was formed and other cryptos followed the downhill as well.
The market followed up with huge amount of reports and articles which included the drop of not only popular but also less popular coins, of which a total of $25 billion is estimated to have been wiped out.
Bitcoin, the first digital coin ever to be created was trading on a sideways movement for months hanging just above the 6000 USD round price.
The break below sent the crypto to its lowest level in 13 months.
No direct reason has been given as to what is behind the crash which followed several months of relative stability in cryptocurrency markets.
However, as analysts and market observers we must make a note of a significant event that has come to our knowledge going through the charts.
While Crypto currencies were being oversold during Wednesday, a significant purchase on Gold was enacted.
The precious metal increased by 15 USD and simultaneously Bitcoin lost almost 1000 USD and broke under the 6000 USD psychological threshold.
No relation between the events is confirmed, but the time of the price action that took place regarding the two instruments, was almost the same increasing suspicions of a possible trade off.
It could be the case that some selling was observed by traders on Bitcoin, and fears breaking under the pre mentioned level increased, and that led to a selling of even stronger levels pushing the digital currency to a 2018 low.
Much speculation has spread on the hard fork that many analysts rushed to use as an excuse.
A hard fork is a permanent divergence from the previous version of the blockchain.
It was said that this interfered with the cryptos dropping, though we would like not to comment if this is accurate or not.
However, big swings is something smart investors look for opportunities, and could lead to under-priced instruments and create an edge for themselves using price action as a weapon.
This drop could be the reason for new crypto buyers to enter the market and like a wave carry the coins somewhat higher.
In our opinion, the way Cryptos are being used at the moment is totally wrong.
Investors looking for Cryptos to purchase for a fast profit could be better off not entering at all.
Cryptos should be bought only when investors are willing to hold them for a longer span.
An investment of that type could prove to be much smarter and useful.
It must be noted that it could take years for Crypto currencies to create a strong foundation and establish reliability in the financial markets.
Just 10 years ago when Bitcoin was created, no one could have imagined it would have risen to this level, being the center of attention on a daily basis.
Thus, the long term view on Cryptos remains unknown and no drop, large or minor, could make a difference.
The main reason Cryptos are declining could be because Investor interests are not protected due to cyber theft or lack of regulation.
In addition, in the 1920s, speculation and fraudulent activities, eventually led to the Crash of 1929 and the Great Depression.
In most cases, the financial world takes notes and lectures from instances like these and implements measures to watch out for this kind of activities.
In the years to come, exchanges, regulators, brokers and other participants of the Crypto market should improve market monitoring and surveillance.
Bitcoin moved in a sideways movement above 6000 since the previous August.
However with the break below 6000 USD during the past days, a bearish sentiment has taken over.
If this downfall is to continue we may see the digital coin moving towards the 5365 (S1) support level and head even lower for the 4930 (S2) support barrier.
In the opposite direction, Bitcoin could move up for the 5800 USD (R1) resistance level and reach even higher for the 6170 (R2) resistance barrier.
A jump even higher could lead the digital coin to move towards the 6600 (R3) resistance level.
At the moment the digital coin seems to have stabilized just above the 5365 (S1) support level.