Market Analysis: Bitcoin (BTC) Encounters Strong Resistance at $3,700 Level During Rally, Crashes To $3,500. All Major Cryptocurrencies in the Red

January 20, 2019 / by Zachary Mashiach

Over the last 48 hours, the crypto markets have returned to a state of turbulence after several days of stable conditions.

The price of Bitcoin (BTC) rapidly rallied from $3,630 to $3,775 on Jan. 19. The entire rally lasted less than 30 minutes, suggesting it was fueled by automated trading bots responding to a short squeeze.

The price of Bitcoin (BTC) then stabilized towards the $3,700 level, which has been a dominant resistance level since Jan. 10. Today, Bitcoin (BTC) crashed from $3,700 to $3,470 and has since then recovered to $3,530. Overall, Bitcoin (BTC) is down four percent in the past 24 hours.

It is apparent that $3,500 is the support level to watch and $3,700 is the key resistance level, and these levels have been dominant for 10 days. It is possible that today’s crash is related to the CME Bitcoin futures contract expiration on Jan. 25.

It is generally observed that Bitcoin’s (BTC) price declines in the days leading up to a CME futures contract expiration. This is due to a practice called banging the close, where futures traders manipulate an asset to crash right before expiration in order to increase short-selling profits.

Certainly, January has been dominated by short sellers, with short positions likely taken out at the $3,900 level just after the December futures contract expired.

All other major cryptocurrencies are down today. Ripple (XRP) is down 3.3 percent; Ethereum (ETH) is down 4.2 percent; Bitcoin Cash (BCH) is down 5.5 percent; Bitcoin SV (BSV) is down 2.8 percent; EOS is down 4.7 percent; Stellar (XLM) is down 3.3 percent; Litecoin (LTC) is down five percent; Tron (TRX) is down 1.8 percent; IOTA is down 4.8 percent; Monero (XMR) is down 4.2 percent; Dash is down 5.9 percent; and Dogecoin (DOGE) is down 1.7 percent.

Dogecoin (DOGE) continues to show robustness in the face of broad crypto space declines with much less of a loss than other major cryptocurrencies today.

Ethereum (ETH) will likely continue to face turbulence in the coming weeks due to the Constantinople hard fork scheduled for late February. The fork is perhaps more unpopular than ever due to the fork being delayed as well as an accidental chain split.

The total cryptocurrency market cap has decreased to $120 billion, still 20 percent above bear market lows set in mid-December. Bitcoin (BTC) and the rest of the crypto market are only one crash away from retesting bear market lows, and a crash is quite possible considering the weakness in the Ethereum (ETH) market and the coming CME Bitcoin futures contract expiration on Jan. 25.