Prior to the Christmas break, the crypto market was mounting a good corrective rally. Most digital currencies gained more than 20% in the process. Afterwards, the Crypto market has lost over $18 billion in about 48 hours. What's causing the volatility?
December 27, 2018 | AtoZ Markets - The Crypto market has not been able to sustain last week gains. After a bit of resurgence, the market has lost more than $18 billion as major coins and tokens dropped. After a promising surge to $4300, Bitcoin had dipped to $3700. Bitcoin cash also declined to $170 from $230. Other majors followed in the same pattern over the same 48 hours period after a $40 billion market gain last week. Why the wild volatility? What is causing the latest prices decline?
Why The Wild Volatility?
Despite the new rally giving some Crypto bulls hope, the market is still generally bearish. Price has not yet entered the bullish zone where one can say a real bullish recovery has started. According to technical analysis - Elliott wave theory, a 5-wave rally from $3100 low (for Bitcoin) is expected to $6500-$7500. Unless this happens, Bitcoin might just complete another corrective structure to $5200-$5500 and decline further below $3000 to $2000 and even below. Bullish volatility should be able to drive prices upside with increased volume.
For the Crypto market to mount a proper bullish trend, it will have to undergo multi-months rally, consolidation and accumulation. Just like we saw in the bearish market from the all-time-high. Price dropped with increased volatility and declining volume, consolidates for many weeks and then followed by a bearish breakout. Prior to the November breakout, prices consolidated for 9 months and completed a triangle pattern amid low declining before it continued downside. Bitcoin and the entire market is expected to move in similar manner upside if the market will ever pick up again. Until all these happen, we can't conveniently say a bottom has already been reached.
When Will Price Pick Up?
For the prices of Cryptocurrencies to pick up and start a genuine recovery, it must show high level of stability for an extended period of time. Until this happens, the market will continue to display wild volatility while remaining in a low price range.
BTCUSD Technical Analysis and Important Price Levels
From technical point of view, price is expected to continue upside after the current dip. In the last Bitcoin forecast, we had two scenarios which have been updated in the new chart above. To start a real bullish recovery, price has to gradually mount up to 6500-7500 with an impulse wave rally. The chart also print an 'inverted head and shoulder pattern' which if completes and price breaks upside as a result, should see a hit of 5200-5500 at least. If price drops below 3000 support afterwards, then a dip to 1800-1000 will most likely follow.
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