Bitcoin (BTC) continues to demonstrate weakness as the volume is at its lowest since the beginning of the year and interest is fading away. Search engine volume for Bitcoin (BTC) has fallen back to its lowest. While some may argue that this is a good sign to start buying up, it is important to note that Bitcoin (BTC) has not yet broken important resistance lines for a reversal to be expected. The EMA alignment continues to remain bullish and price action looks weak to breach the near term resistance line (shown in orange).
RSI levels for Bitcoin (BTC) also signal a near term correction as resistance is reached. The daily chart for Bitcoin (BTC) shows how Bitcoin (BTC) fell down to $5,800 levels before and marked a red and green candle at that level. Bitcoin (BTC) could repeat that for a third time, but this time it is likely to break below $5,800 level and fall all the way down to $5,000. While some analysts argue that the average cost to mine a Bitcoin (BTC) comes down to $7,000, it should be noted that sometimes market corrections can extend beyond logical levels as markets behave unreasonably most of the time.
Another aspect of this is that with a decrease in mining activity, those that are left to mine can mine more profitably so maybe it is still profitable for some miners even at these prices. However, there is a limit to how low Bitcoin (BTC) has to fall in order for mining to remain viable. That level could be $5,000 or it could be above $5,000, but the fact remains that market can fall below $5,000 even if mining is not profitable. This will be made possibly by the low volume, which means that a lot less sell orders are required to push prices lower. Fortunately for Bitcoin (BTC) bulls, such moves at a time of low volume are not indicative of the real interest in the market, so it takes a lot less to reverse them.
Bitcoin (BTC) is currently trading in a well defined rising wedge as can be seen on the 4H chart. This is usually indicative of an imminent bearish price action. Considering that Bitcoin (BTC) already faces resistance at the orange line, it would be reasonable to expect that price may not trade all the way up into the rising wedge and fall to the downside before breaching the orange line. This would mean that Bitcoin (BTC) has found another near term resistance which will also hasten its correction to find a bottom most likely near $5,000 or slightly below. Predictions from popular Bitcoin maximalists like Arthur Hayes of Bitmex (predicting $50,000+ per BTC by 2018), Tim Draper (predicting $250,000+ per BTC by 2022), John Mcafee ($1 Million+ per BTC by 2020) and Tom Lee of Fundstrat (predicting $20,000+ per BTC by 2018) all appear to be confidence inspiring and indicate that the current market correction is not something to panic about, but rather an opportunity to buy as Bitcoin (BTC)’s best days are ahead of it.