Bitcoin has dropped to $6,275, according to coinmarketcap, as it it continues the slide started at the weekend. On Coinbase the price is lower, at $6,189.
After a period of untypically low volatility, bitcoin is on the move again, but in the wrong direction for bulls.
The danger of watching the market too closely is tunnel vision. With strong support for bitcoin at $5,800-$6,000, will set the limits of the sell-off. Indeed, if the price . moves towards those levels more decisively it will likely lead to an opposing reaction from buyers, with many seeing the $6,000 line as a buy signal.
With the descending triangle pattern still in play, the bottom is still consolidating, so a collapse below $5,800 (magenta line) is unlikely, and if it happens will be shortlived.
BTCUSD 1-hour chart 15 November 2018 – descending triangle is still consolidating the bottom
But sticking with the near-term, what is pushing prices lower?
It is down to a number of things in combination.
Bitcoin Cash fork war hurting sentiment
First there’s the Bitcoin Cash mess which s turning into an object lesson in governance weakness. It highlights the immaturity of the space despite the billions pound valuations of top alts.
With a paucity of new buyers entering the bitcoin market, continued price weakness is to be expected but has been added to buy the Bitcoin Cash fork war fallout which seems to have damaged sentiment more widely.
Bitcoin Cash has given up all its fork gains and is now 25% down on the week at $485, off 8% today, according to coinmarketcap.
IMF’s deadly embrace
Another factor that has not had much attention, was the news yesterday that the IMF thinks it might be a good idea to set up Central Bank Digital Currencies (CBDCs).
That could be a negative for crypto if CBDCs are to be created as a way of strangling crypto at birth.
Speaking at the Singapore FinTech conference, the largest such event anywhere in the world, IMF chief, Christine Lagarde said the following, which it is worth quoting at length:
“The advantage is clear. Your payment would be immediate, safe, cheap, and potentially semi-anonymous. And central banks would retain a sure footing in payments. In addition, they would offer a more level playing field for competition, and a platform for innovation. Meanwhile your bank or fellow entrepreneurs would have ensured a friendly user experience based on the latest technologies,.
“Putting it another way. The central bank focuses on its comparative advantage – back-end settlement – and financial institutions and start-ups are free to focus on what they do best – client interface and innovation. This is public-private partnership at its best.”
So crypto could have a “legitimate” role after all says Lagarde.
Is there something the IMF knows that we don’t that’s brought on the change in attitude?
Western countries are in danger of falling behind Asia, with Japan and places like Singapore taking the lead in crypto developments.
Also, China, despite hostility to “cryptocurrencies”, is very keen on blockchain.
Given the ability to direct (or try to) economic affairs and its access to large amounts of data, the Chinese state is already stealing a march on global competitors.
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK’s second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane