I thought it important to raise up some concern for what I see as a possible new bear trend in the Crypto Markets. I am a trader now for over 7 years and I want to explain a few things that we can see from our chart here. First of all, I want to express that I am using the BitCoin's chart here as it was one of the very first Cryptocurrencies out and is the father of all other coins. Using it's chart to analyze ALL Crypto, while not 100% accurate, can be used as a guide post as to what the other currencies will act from as most other forms of Crypto have almost identical patterns.
So now that we got that out of the way, let's take a look. What I see here is the beginning of a new bear trend possibly . The peak hit in December and now about 3 months in we can see that in January we tried testing the highs and didn't even get close. Once the test of the high in December failed miserably in January you saw an immediate sell off to February's low. Support was found around the 6000 area and then it was off to the races to see where the next high would get us to. It looks like that high was 10000. This is a critical area and an important time for us to watch this 10000 area and we have to ask ourselves this question... why the sell off?
Good question! Well nothing can continue to skyrocket without a correction. Right now, the BitCoin and crypto in itself is trying to find what it is worth. There are many factors to why we attach value to crypto and what makes crypto. For many, value is attached to money simply because we believe it is worth something and that belief in itself gives us value. It's how all currencies gather their value in their infancy. Only after it becomes accepted by a large mass of people do we then attach tangible asset valuation to it. For instance, take the dollar... many people watch very closely the price of oil and gold to predict the dollars future movement. But in the dollar's infancy, while fighting the British it was just as volatile as the BitCoin. The dollar was attached to people's belief on whether America would win and the belief of those behind America is what gave the dollar it's initial value.
So, let's get back to the question, why the sell off? Recently more scrutiny and a mindful eye by the world's top governments has been put on crypto. The nations of the world realize that actual wealth is being put into a category of currency that is not being regulated by them! This wealth is something they can not govern, control, regulate, and make money off of. In fact many governements are thinking about copying the format and releasing it saying that their crypto is better than the current crypto market because it is more stable. That frankly is laughable. It's a game of minds fighting over people's belief in what is or what isn't valuable.
We are in the initial stage of the government combating the crypto markets. Will they succeed is the question. Well China has already made it illegal for anyone to be involved in the crypto markets and that was that. Here's a great article in forbes talking about it https://www.forbes.com/sites/kenrapoza/2017/11/02/cryptocurrency-exchanges-officially-dead-in-china/ and I would guess that you will see the crypto markets go down from here to the last support level in the 6000 area.
We could see the price action stay in the 10000 area for some time, but I'm guessing that from the latest news and governments turning their eyes towards shutting down crypto, 6000 here we come. And the sad thing is this.... if all governments begin to do as China has done and make Crypto markets illegal, then Crypto becomes a black market and value will fall because it will become much harder to trade and exchange for other legal forms of currency. You will also see it much harder for the concept of crypto to be used to directly pay for things or for users [buyers/sellers] accept crypto.
We are in interesting times and of course everything I have said here is all speculation, but we shall see what happens my friends and make sure to upvote/share if you found this helpful!