Bitcoin Weekly: A Bear Market Is Now Increasingly Likely

Markets sold off across the board late last week, with silver recording its biggest ever daily drawdown in history on Friday, as it crashed from an open at $115 to a close at $85. On Saturday, bitcoin followed down into a lower low. It’s now testing the area around $75k, where it is likely to find at least short term support.

This all came at the back of Trump’s announcement of Kevin Warsh as the new chair of the US Federal Reserve. Apparently Mr. Warsh was a more hawkish choice than the markets wanted, with the sell-off showing there will be less easy money from the central bank than expected.

The weakness in the bitcoin chart was already there though, as I’ve been repeating ad nauseam over the past two months. So if it wasn’t for this particular news item, it probably would have been something else that sent it on this next leg down.

Either way, the week closed at 76.9k, after slightly bouncing from a low at 75.5k. This low hit the upper edge of the support area from 72-76k that I drew in the chart in late November. The US markets have not opened yet though, so let’s see what happens as they open and the ETF:s possibly start selling.

In the end though, there’s a decent chance this support area holds, and we at least get some chop around this level before a new direction is established. However, this lower low makes it more likely that bitcoin has entered a real bear market. And if so, any bounce will likely be a short term counter rally, eventually turning back down for a lower low before the cycle bottom is in.