If the bitcoin price falls below the important year-to-date support level, the dominant cryptocurrency will suffer irreparable damage in the marketplace. This is the opinion of Renaissance Macro Research, quoted by CNBC on Thursday Aug. 9.
Bitcoin May Be ‘Permanently Impaired’
According to the financial analysis firm, what bitcoin is facing right now could be much more significant than just a brief bear run or a retracement. The cryptocurrency could in fact be facing an existential crisis, with its key year-to-date support level being the buffer between it and more substantial damage. Break that level, says Renaissance Macro Research, and bitcoin will be “permanently impaired.”
After a bull run took it well above $8,000, bitcoin has sunk back below $7,000, and its current price is roughly 14 percent down on the same time a week ago. On Wednesday August 7, it lost about 6 percent of its value on news that the U.S. Securities and Exchange Commission (SEC) delayed a long-awaited decision on a proposed bitcoin exchange-traded fund (ETF).
This, however, could just be the tip of the pain iceberg for investors according to Renaissance head of technical tesearch Jeff deGraaf.
Speaking to CNBC, he stated that if the psychologically important year-to-date support level is breached, he would recommend taking short positions on BTC.
Speaking to clients on Thursday, deGraaf said:
“Parabolic moves are notoriously dangerous for short‐sellers … Usually a top develops that often appears as a descending triangle over months, with reduced volatility and little [fanfare]. Once the top is complete on the support violation, the security in question can often be considered permanently impaired or even ‘game‐over’. We are of course referencing Bitcoin as exhibit ‘A’ in today’s market.”
deGraaf’s words will come as bad news for cryptocurrency investors because he is a personality that markets generally tend to take note of when he speaks. As one of Wall Street’s best regarded forecasters since the turn of the millennium, deGraaf has been recognised severally for accurate predictions and peerless analysis. For a total of 10 years, he has been ranked as top technical analyst by Investor Magazine, and in 2014 he was inducted into the Institutional Investor’s Research Hall of Fame.
What all of this potentially means to an investor is that one of Wall Street’s finest analysts has painted a scenario where bitcoin — down about 50 percent in 2018 — is not going on a bear run it will recover from, but is rather drifting toward a position of permanent asset damage.
Earlier this week, however, CCN reported that Pantera Capital CEO Dan Morehead urged investors to “stop overreacting” to the SEC’s delayed response to the proposed bitcoin ETF, as bitcoin continues to take a pounding.
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Source: https://ccn.com Read more here!