Author – Mil
In our last technical analysis on the price action of Bitcoin on February 26, I mentioned that the Bitcoin price is currently stuck in the kill zone with strong resistance at the $11,800 level and strong support at the $9,400 level. I also mentioned that Bitcoin is currently deciding whether to move up and push towards the $13,000 level, signaling the start of Elliott Wave Theory’s Wave 3 ascent, or to continue with the Wave 2 correction.
In the past week, we have seen that the latter seems to be true. Wave 2 was not yet done, and so we saw a declining price action. Just recently, Bitcoin re-tried the $11,800 level, and was not successful in breaching resistance. The price corrected and plummeted to the $10,400 level. This was a healthy price correction since it is still the continuation of the Wave 2 correction wave. However, in the past 24 hours, we also saw Bitcoin plummet even further to the $9,400 levels. As of press time, Bitcoin is consolidating at the $10,000 level.
This recent decline in Bitcoin down to the $9,400 level is an unhealthy correction and is only caused by widespread market FUD. We can see two things here:
- The trading exchange, Binance, was hacked by unknown parties. Binance was able to quickly act upon the hacking incident, and immediately froze all deposit, trading, and withdrawals during the time of the hack. The hackers went on selling customer coins and bought a little-known coin called VIA, which massively inflated the price, even making a whopping 7,500% increase. A tweet from Binance CEO, Changpeng Zhao, assured the public and said, “All funds are safe. There were irregularities in trading activity, automatic alarms triggered. Some accounts may have been compromised by phishing from before. We are still investigating. All funds are safe.” In another tweet, CZ also went on to saying, “Binance has reversed all irregular trades. All deposit, trading, and withdrawals are resumed. [I] will write more detailed account of what happened shortly. Interestingly, the hackers lost coins during this attempt. We will donate this to Binance Charity.”
Although Binance was able to quickly address this hacking incident, it affected the market activities and caused FUD among many traders. This triggered the Bitcoin selloff, which further declined Bitcoin prices from $10,400 level to the $9,400 level. Again, this is an unhealthy correction, merely caused by FUD in the market. Since the issue has already been addressed, we can expect recovery from Bitcoin prices.
- The second thing we can see here is that we have tested the $9,400 support level, and it has proven to be strong enough to hold market FUD. As of the previous technical analysis, Elliott Wave Theory suggests that the $9,400 level is a strong support area. Bitcoin’s strong hold at $9,400 against market panic is a good sign that there will soon be recovery in price action, and that the Wave 3 ascent is still possible in the near future. A breach of the $9,400 level would have signaled another bearish price action movement, and would reverse the momentum. In the next few days, expect further consolidation of Bitcoin prices. Once momentum resumes, the ascent to $13,000 will soon be in sight.
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