Bitcoin has been caught within an unrelenting bout of sideways trading within the $7,000 region in the time since it bounced from lows of $6,500 in late-November. This consolidation period has made it increasingly unclear as to where BTC will go next.
One potential factor that could provide some insight into what type of movement is coming next is the fact that Bitcoin’s long positions have been skyrocketing, which may actually spell trouble for BTC’s bulls in the near-term.
Bitcoin Continues Inching Lower as Bears Build Strength
At the time of writing, Bitcoin is trading down over 3% at its current price of $7,285, which marks a notable decline from its daily highs of over $7,600 that were set in sharp and fleeting movement yesterday.
BTC’s rejection at this level signals that sellers currently have firm control of the upper-$7,000 region, and it currently remains unclear as to whether or not buyers will be able to defend the support levels that have been established around $7,000.
One factor that should be closely watched in the near-term is the massive increase in BTC long positions, which could be a bearish sign, as these longs could help fuel a “long squeeze” that perpetuates a massive downwards movement.
Zack Voell, a popular figure within the cryptocurrency markets, pointed out the sudden rise in long positions in a recent tweet, saying:
“Someone is longing thehell out of bitcoin.”
While looking at the chart that Voell referenced above, it is clear that there is an inverse correlation between long/short positions and price movements, as long positions dived to multi-year lows in March of 2019 when BTC was trading at yearly lows in the $3,000 region, just before it began a massive rally up to $13,800.
Why is BTC Stuck in a Bout of Sideways Trading?
Although extended periods of sideways trading can come about as a result of accumulation, Cantering Clark, a popular cryptocurrency analyst on Twitter, explained in a recent tweet that this current consolidation period is simple a “weak attempt to reclaim an important level.”
“No major break, nothing changed. Narrative starts when direction is less certain. This isn’t accumulation, it’s a weak attempt to reclaim an important level. Further down we go,” he bearishly explained.
This extended period of Bitcoin trading within the $7,000 region may soon come to an end, as the unprecedented rise in long positions may provide significant fuel to sellers.
Bitcoin (BTCUSD) forecast on January 27 — February 2, 2020
Cryptocurrency Bitcoin (BTC/USD) is trading at 8359.Cryptocurrency quotes are trading above the moving average with a period of 55. This indicates a bullish trend on Bitcoin. At the moment, cryptocurrency quotes are moving near the middle border of the Bollinger Bands indicator stripes.
Bitcoin (BTCUSD) forecast on January 27 — February 2, 2020
As part of the Bitcoin exchange rate forecast, a test level of 8000 is expected. Where can we expect an attempt to continue the growth of BTC/USD and the further development of the upward trend. The purpose of this movement is the area near the level of 10020. The conservative area for buying Bitcoin is located near the lower border of the Bollinger Bands indicator strip at 7800.
Bitcoin (BTCUSD) forecast on January 27 — February 2, 2020 implies a test level of 8000. Further growth is expected to continue to the area above the level of 10020. The conservative area for buying Bitcoin is located area of 7800. Cancellation of the cryptocurrency growth option will be a breakdown of the level of 7720. In this case, we can expect further the fall.
Venezuela Still Has the Highest Bitcoin Volumes
Cryptocurrencies are making waves in a number of problematic countries. However, Venezuela, which is notorious for its hyperinflation, is still topping the charts in terms of Bitcoin trading volumes.
In a recent tweet, Larry Cermak, one of the Block’s authors, revealed the top eight countries with the highest Bitcoin trading volumes, according to data from LocalBitcoin. Topped by Venezuela ($305,93 million), it also includes Colombia ($134,22 million), Peru ($45,54 million), Hong Kong (note: it’s not a country, it’s a special administrative unit of China, $21,73 million), Chile ($13,84 million). As well as Argentina ($11,94 million), Iran ($5,81 million), and Egypt ($1,40 million).
In a subsequent tweet, Cermak also showed the growth of LocalBitcoins volume in 2019 compared to 2018. The numbers show that the biggest surge occurred in Egypt (69,8%), Colombia (59,8%) and Peru (47,7%). Yet, Venezuela has also seen a tangible increase — 33,2%
What are the reasons?
Such impressive numbers grabbed the community’s attention. Consequently, assumptions flooded in as to the underlying reasons behind these developments.
A user that goes by the name santi.eth – devcon2020, hacktivist
@DemocracyEarth, believes that the drug cartels are playing a big role here. He writes, “that’s because it’s the money of Maduro’s cronies who launder coke revenue. they are the main users of LocalBitcoins and then later liquidate the BTC for renminbi with a little help from China.”
He adds, “Colombia and Peru in the second place pretty much proves my point.”
But not everyone agrees. Another user suggests that the numbers are high because of large volumes of remittances. He tweets, “Or they are being used by Venezuelan migrants to send money abroad. Colombia and Perú have been the countries to receive the most, so it would check out there as well.
@MattAhlborg might have more data to further this point.”
This view is more conventional, as it has now become clear that cryptocurrencies have become widely used for remittances. Just think of the Mexican case.
Besides, many have pointed out that cryptocurrencies are enticing because they alleviate the plight of citizens that live in hyperinflationary economies. Argentina is an exemplary case.
One does not rule out the other
On the subject of the underlying reasons behind the numbers, it should be noted that there is no right or wrong here. All of the mentioned explanations are perfectly viable and could be concurrently contributing to BTC’s popularity in these countries.
Besides, it’s evident from the list that another explanation should be factored in. It has to do with political turmoil. To remind, in 2019 Hong Kong saw a series of protests that were politically-driven. More recently, Bitcoin trading volumes went up following the US attack that killed a prominent Iranian top general.
Previously, Altcoin Buzz explained how BTC threatens the US dollar.
Bitcoin News Today – Headlines for January 26
- Bitcoin remains trapped beneath its previous support level
- Bitcoin finds strong support at the $8,200 level
- The major resistance of Bitcoin is near $8,500
Bitcoin News Today – The price of Bitcoin (BTC) has been relatively stagnant over the past day, after plunging from its year-to-date high. BTC started correcting lower from its 2020 high of $9,200 against the U.S. dollar. Nevertheless, the price of the digital currency is still in an upward trend and it could find buyers close to the $8k or $7,670 mark.
Bitcoin Finds a New Strong Support Level
After forming a 2020 high close to the $9,200 mark, Bitcoin has been on a downward trend. The price of the digital currency broke below the $9k and $8,800 support levels to enter a bearish zone. The bears were able to push the price of the digital currency beneath the 23.6 percent Fibonacci retracement level of the previous swing from the low of $6,836 to the high of $9,191.
Bitcoin (BTC) Price Today – BTC / USD
The digital currency continued its downtrend and broke below the major $8,500 support level. There are several crucial support levels on the downside close to the $8,200 and $8k levels. However, the major support of the digital currency is close to the $8k level since
Moreover, the 50 percent Fibonacci retracement level of the previous swing from the low of $6,836 to the high of $9,191 is also close to the $8k level. As such, the digital currency remains supported on the downside if the price corrects further.
On the upside, the major resistance of the digital currency is close to the $8,500 mark. There is also a formation of a bullish flag and declining channel with hurdles close to the $8,500 mark on the daily chart of the BTC/USD trading pair. Hence, the world’s most dominant digital currency needs to break over the $8,500 and $8,540 hurdle points to start a fresh increase. Furthermore, a break over the $8,600 mark would pave the way for more gains towards the $9k and $9,200 marks.
Will Bitcoin Break Below the $8k Level?
Bitcoin’s major support is the $8k level. The $8k mark is the major buy zone for the digital currency. If the digital currency breaks below the $8k level, the next major support is close to the $7,670 mark. The previous breakout area was close to the $7,670 mark and it now coincides with the 61.8 percent Fibonacci retracement level of the previous swing from the low of $6,836 to the high of $9,191.
As such, if the digital currency breaks below the $7,670 and $7,600 levels, it could negate the present bullish view. If this happens, the price of Bitcoin might return to the $6,500 support level.