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Historical day! Volatility increases, Bitcoin collapses

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Volatility has increased again amid an escalation of financial tension, recently fueled by the oil price war. Here a technical analysis of Bitcoin about it.

Despite the agreement attempt by OPEC to reduce crude oil production, Saudi Arabia ended up eliminating these plans by drastically decreasing the price of its oil. This after Russia refused to lower its pumping.

The Arab country also increased its internal production amid a sharp decline in the demand for black gold, a product of quarantines by the Coronavirus.

As a consequence, referential oil prices plummet imminently.

The West Texas Intermediate (WTI), the US, falls more than 32%, thus reaching USD 27, touching an area of ​​historic low.

This has been the largest percentage drop in oil markets since the First Gulf War, which occurred in 1991.

Impact of the war on oil prices in other markets

As this is a macro-economic situation, other markets are also affected.

The Canadian and Australian dollars made a flash crash in the early hours of this Monday, thus ensuring a week of high volatility in the forex market.

Technical Analysis - Australian Dollar Chart vs. US dollar on a daily basis.
Australian dollar vs. chart. US dollar on a daily basis.

The 10-year bonds of the United States fell for the first time in history below 0.

Technical Analysis - Performance bonds the government of the United States to 10 years
Performance of the 10-year government bonds of the United States.

The S&P 500 volatility index soared again. It even exceeded the levels reached during the week from 24 to 28 last month.

This situation of extreme volatility led to US futures. were suspended for 15 minutes to dissipate a little the force of fear in the markets. If it continues to increase, that market could close for a whole day.

Technical Analysis - Volatility Index S & P500 (VIX)
Volatility index of the S & P500 (VIX).

The cryptocurrency market also dawned with red numbers. A new fall in the price of Bitcoin causes it to lose more than 10% of its value in the last 24 hours.

Many doubt the veracity of the theory that lists BTC as a refuge value. However, gold, although it has not fallen too much, has not increased its price exponentially.

Contrary to what one would think would happen in a situation like the one experienced, the refuge par excellence has lost part of its profits after reaching a maximum of 5 years.

But will Bitcoin continue to fall alongside other markets? Let’s go to the price charts to perform a technical analysis of the current situation.

Weekly temporary

As we mentioned in a recent publication, the bears took momentary control after rejecting the resistance left by the price. This happened after reaching USD 10,350 in October 2019.

Subsequently, a weekly candle with a large bearish body could be observed, demonstrating the clear power of sellers over the current situation.

Looking at the price of Bitcoin only from the weekly chart, the road seemed completely clear to support at USD 7,750.

Indeed, the closest bearish target was reached. The bears took advantage of the situation of instability and fear in the markets to make profits with the fall of the crypto market.

In a previous analysis, also indicate the possibility of developing an inverted Shoulder Head Shoulder after the price will reach that support. However, it is not time to think that this will happen.

We need to observe a lot of rejection in the area that is found to think that bears have lost strength. Although, for the moment, the control of sellers is imminent.

Technical analysis of Bitcoin from the weekly chart.
Technical analysis of Bitcoin from the weekly chart.

The simple 18-week moving average was violated, the slight attempt to be respected seen yesterday was not enough. The bullish crossing signal seen in mid-January could be false if the short-term negative expectation continues.

The 200-week SMA remains bullish and far from the price, supporting the strong upward trend that Bitcoin maintains throughout its history.

Moving averages on the weekly Bitcoin price chart.
Moving averages on the weekly Bitcoin price chart.

The RSI has become bearish again, the current situation achieved that the bullish signal that tended from a thread was eliminated.

RSI on the weekly chart of Bitcoin.
RSI on the weekly Bitcoin chart.

Bitcoin technical analysis from daily temporality

The clear succession of increasingly low highs took effect and the search for a new lower low was successful.

By violating support at USD 8,450, the downtrend seen in the daily time frame was resumed.

Technical analysis of Bitcoin from the daily chart.
Technical analysis of Bitcoin from the daily chart.

Moving averages also support the negative sentiment for the short term.

The 200-day SMA bearish break now is effective, after yesterday’s candle closed with a large body below it.

The SMA of 18 and EMA of 8 if they were already bearish and had functioned as dynamic resistances while the price fell towards USD 9.150. Currently, the quotation moved considerably away from both moving averages, indicating that a new setback could occur in the next few hours.

Moving averages on the daily Bitcoin vs. chart. American dollar.
Moving averages on the daily Bitcoin vs. chart. American dollar.

The RSI remains in bearish territory, due to its location below level 50.

RSI on the BTC - USD chart in daily time.
RSI on the BTC – USD chart in daily time.

Price levels to watch

If buyers manage to defend support at USD 7,750, it could initiate a pullback. Otherwise, the next support to be monitored will be USD 6,515, the price where the formation of Shoulder Head Shoulder inverted that so much positivism generated in early 2020 began.

Supports and resistances to watch. Technical analysis of the price of the Bitcoin
Supports and resistances to watch. Technical analysis of the price of Bitcoin.

At the moment, I don’t consider it reasonable to try short with Bitcoin.

The current instability situation could continue to generate extremely volatile movements and the crypto market could benefit at any time. But if we look at the intrinsic value that could provide shelter in the midst of chaos.

Meanwhile, the Bitcoin hash rate reaches new highs, making it stronger and safer. However, the current price has caused weaker mining computers to be at a critical moment. Some even generating losses in the midst of climbing the difficulty of mining.

Will these miners get rid of their BTC rewards or defend the price in the middle of the fall?

Let us know your opinion in the comments, we will be happy to read you.



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