Bitcoin crashes to $14,000? 3 reasons why it could happen
Bitcoin has fallen sharply this week, losing some of its December gains and maintaining its volatility due to profit taking among day traders.
Most actively traded Bitcoin derivatives fell by an average of 13 percent to $17,705 from their all-time highs recorded last week. Meanwhile, the crypto-flagship spot price still on Profit Revolution rose by 70 percent in the fourth quarter, suggesting that the recent downtrend may be an organic downward correction.
Investors tend to buy Bitcoin when they fear the outlook for the global economy. This trend boosted demand for the crypto currency earlier this year, after cheaper lending by the Federal Reserve and unlimited facilities to buy bonds reduced the appeal of traditional safe-haven currencies.
Nevertheless, a combination of at least three fundamental indicators and technical fractals suggest that the price of Bitcoin could continue to fall in the coming sessions.
#No. 1 The 20 WMA Magnet
The 20-day exponential moving average serves as a short-term bias indicator for Bitcoin traders. If the price of the crypto-currency holds the wave as support, the probability of an uptrend is high. Nevertheless, a slide below this level will prolong the downward movement in the majority of cases.
Since November 26, Bitcoin has tested the 20-DMA for a collapse movement at least four times. However, it has also encountered bull resistance, leading to solid setbacks – one of which even led to the new all-time high of almost $20,000. Therefore, the crypto currency has the potential to make up for its recent losses – if it manages to float above the 20 DMA level.
However, Bitcoin’s weekly chart offers a more downward sloping outlook.