Bitcoin is currently gripped in a tight channel of resistance (Image: Getty)
However, some heavy downward pressure this morning has seen bitcoin’s price move by some $200 as bearish traders attempt to reclaim what was slowly building into a potential bull market. This tension comes at a crucial point in the current market cycle as volume indicators suggest that investment in crypto is in an accumulative phase – essentially, traders appear to be buying in during what they anticipate to be the bottom price before the much-anticipated “halving” in May.
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A halving occurs roughly every four years and acts as a correction to ensure the availability of bitcoins remains steady until the maximum supply of 21 million has been reached.
The term “halving” simply means miners will receive 50 percent fewer rewards for verifying transactions.
It is widely believed that this next halving will have a dramatic effect on the price of bitcoin.
This would naturally explain why it is likely that bitcoin is entering an accumulative phase – as we edge closer to the halving, more people are keen to get their chips down now on what they expect to be the lowest value before what some are certain will be a price explosion.
There is no crystal ball to suggest that is exactly what will happen.
After all, previous halving events have had mixed responses.
Therefore, the accumulation in the BTC market is largely driven by people gambling on a hunch.
However, the sting in the tail here may yet belong on a bear.
As the bulls attempt to build volume and maintain the price above $8,400 it could be that the historically-stronger and more influential bears want to drive the price down several times in the run up to the halving.
After all, if the widely-held belief is resting on a dramatic price rise in May, then it could be prudent to create a number of lows to allow further opportunities for “buy-in” that would also potentially deliver greater profit margins.
It is this butting of heads between the two that is currently nudging the price down towards the $8,400 line of resistance – a figure that has often been the calling point on several journeys north.
And, looking at the amount of volume coming into the market, that’s precisely where many people believe this train is heading.
• Coin Rivet is a website bringing news, information, analysis, opinion and insight from the fast-moving blockchain world.
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