BITCOIN BEARS REMAIN IN CONTROL AS PRICE APPROACHES $7,000
In April, the price of bitcoin rose from a low of $6,400 to a monthly high of $9,710. In May, the BTC/USD pair has lost almost 30% of its value and is currently trading at close to $7,000.
The decline had been attributed to the disappointing Consensus event in New York and an investigation launched by the United States Department of Justice (DOJ) into bitcoin price manipulation.
Investigators will look at whether bitcoin holders or exchanges have been manipulating bitcoin prices to move higher or lower and will focus on practices such as spoofing (filling the market with fake orders in a bid to encourage others to buy and sell coins) and wash trading (trading with yourself to give the impression of a high market demand). The DOJ is reportedly working alongside the Commodity Futures Trading Commission (CFTC).
Of course, manipulation within the crypto world is not new. It happens all the time. It has been reported that bitcoins are owned by very few people. This gives the holders an incentive to keep pushing the prices higher. This is in contrast to the stock markets where stock holders with a large stage are subjected to scrutiny particularly with regards to reporting. In the crypto space, there are no such rules giving holders a reason to push prices up.
The BTC/USD pair is currently trading at $7051. The pair is trading below the 25 and 50-day moving average. Its Stochastic and Relative Strength Index (RSI) are all in the oversold territory on the four-hour chart as shown below. As such, after hitting the support of $7,000, the pair could start moving up. It could also continue the downward momentum to test the $6400 support.