HAS BITCOIN BOTTOMED?
In December, bitcoin soared to almost $20,000 following a series of positive news. The biggest news of all was the institutionalization of the currency following its listing at the Chicago Board Options Exchange (CBOE) and CME.
After that, the price started falling following another series of negative news, mostly from China and South Korea. Last week, bitcoin continued its decline following reports that Bitfinex, one of the largest exchanges was under investigation. It reached a low of $5860 on Tuesday, before starting to gain. So far, it has gained more than 20% of value from the Tuesday’s low.
Some people now believe that bitcoin has bottomed. Yesterday, Dan Morehead, who had predicted the correction accurately, told CNBC that he believed that bitcoin had bottomed. In the interview, he argued that on average, bear runs take 72 days. The cryptocurrencies bear run is in the 52nd day, which means within a few more days, the prices could move higher.
When Morehead speaks, traders listen. According to Hedge Fund Research Indexes, his fund has recently gained more than 22,000% by investing in cryptocurrencies. He believes that investors’ appetite in cryptocurrencies would help push the price higher.
Today, traders should watch out for the $7800 level, which provides an important support. They should also watch out for the $8626 level, which is the highest level it reached yesterday. A breach in either direction could see an extended price action in that direction.