{"id":19211,"date":"2021-12-07T07:30:38","date_gmt":"2021-12-07T12:30:38","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19211"},"modified":"2021-12-07T07:30:38","modified_gmt":"2021-12-07T12:30:38","slug":"the-flash-crash-hit-our-downside-target-heres-whats-next-for-bitcoin","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/the-flash-crash-hit-our-downside-target-heres-whats-next-for-bitcoin\/","title":{"rendered":"Bitcoin Hit Our Target, Now What?"},"content":{"rendered":"

Crypto investors aren’t afraid of much… except the weekend.<\/p>\n

That’s because when bitcoin falls to the tune of 10-20% in a single hour<\/em>, it tends to happen when almost no one expects it.<\/p>\n

And it happened again this weekend.<\/p>\n

On Friday, bitcoin was trading at $52,200 at 11:50 p.m. Then, at 12:27 a.m., it fell to about $42,300… a 19% crash in less than an hour. <\/p>\n

The only real trigger seemed to have been leveraged positions getting liquidated at the same time.<\/p>\n

But, this isn’t new for bitcoin…<\/p>\n

These episodes seem to happen when bitcoin’s order book is thin and vulnerable – which happens on the weekend. There just isn’t a lot of liquidity to absorb all the leverage coming off all at once – so prices can collapse fast.<\/p>\n

And by doing so this weekend, bitcoin hit our downside target that we issued on November 19 when we said<\/a>:<\/p>\n

\n

Right now, my price target is around the $50K level… and maybe a tad lower. You can also see from the chart that the $48K-$50K area also had a sizeable volume buildup and prices used it as a springboard to recapture all-time highs.<\/p>\n<\/blockquote>\n

After reaching a flash crash low around $42K, bitcoin quickly recovered all the way back to $49K.<\/p>\n

Once these leveraged positions get shaken out, bitcoin prices reset, and new buyers start to come in… And it happened this time as well. <\/p>\n

But, November 19 wasn’t the only time we called for bitcoin to fall… on October 22 during record highs I stated<\/a>,“…the lack of enthusiasm<\/strong> from the big whales should make investors take a step back, take some profits, and wait for better price levels.”<\/p>\n

Well, those better price levels may have come over the weekend… and those whales may have been stepping in at the lows.<\/p>\n

That’s because the same indicator we used to stay away at $65K is the same one showing $40K may be the low for now.<\/p>\n

Let me explain…<\/p>\n

Since there’s a lot of different exchanges out there, bitcoin can trade at different prices.<\/p>\n

But, since most institutional investors use Coinbase to trade crypto, the price discrepancy gives traders a lot of insight at critical technical levels.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When institutional buyers start buying, the price on Coinbase can trade higher than other exchanges (like Kraken) for a short amount of time… which is a sign of institutional interest.<\/p>\n

And at $65K… there just wasn’t any. In fact, they were selling into that strength… <\/em>prompting us to recommend staying away from bitcoin at those levels.<\/p>\n

But it was the exact opposite<\/em> this time around when bitcoin fell almost 20% over the weekend.<\/p>\n

Take a look at this chart…<\/p>\n

\"Chart\"<\/div>\n

It’s almost a perfect mirror image of what happened in October…<\/p>\n

You can see how the Coinbase\/Kraken spread (dashed line) jumped to trade at almost $1,000… meaning the prices on Coinbase were almost $1,000 more expensive than on Kraken (another crypto exchange).<\/p>\n

This type of price difference doesn’t last long as you can see that spread went all the way back to zero… but it signals someone big enough was buying in.<\/p>\n

That’s a great sign for bulls<\/a>…<\/p>\n

It sets a line in the sand. And coincidentally, that line was also the 200-day moving average<\/a> (MA) at $46K – a key technical support area.<\/p>\n

So, not only did bitcoin get some institutional buying at those levels, but it bounced right off that key level.<\/p>\n

Unfortunately, it may have been hard to buy at $42K on Saturday midnight… but it looks like bitcoin may try and consolidate here and make its way back up to retest $55K.<\/p>\n

Right now, the 200-day MA is at around $46K, so I expect bitcoin to retest this level a couple of times (at least) before moving higher.<\/p>\n

But if that chart holds true as it did before… then prices are likely heading higher from here.<\/p>\n

Regards,<\/p>\n

Eric Shamilov
Analyst, Market Minute<\/em><\/p>\n

<\/p>\n

Reader Mailbag<\/h2>\n

In today’s mailbag, Market Minute<\/em> subscriber James shares his thoughts on Eric’s recent essay on the Fed and inflation<\/a>…<\/p>\n

\n

Dear Eric, calling Jay Powell an \u201civory tower economist\u201d is quite generous. I\u2019m sure you know he\u2019s a lawyer by training.<\/p>\n

– James I.<\/strong><\/p>\n<\/blockquote>\n

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

This isn\u2019t new for bitcoin…<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[13],"newsletter-type":[],"ticker":[],"class_list":["post-19211","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-eric-shamilov"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19211"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19211\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19211"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19211"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19211"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19211"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}