TL;DR the next few days are critical…

After the fantastic run-up we saw on Sunday and Monday, bitcoin stabilised – briefly spiking to touch exactly $4,000 (Bitstamp) but then dropping back to consolidate around $3,900, where we find ourselves now.

As far as the next move goes, it’s a mixed picture. On the daily, we’re above both the 50 and 100 MAs. However, volumes are dropping off and are far down from their levels in that recent rise. RSI is coming back down from overbought, as you’d expect after such a dramatic move; the market needs to take a breather. BTC is still in the resistance zone described by the downward-sloping line of lower highs since the end of last year, which also broadly coincides with the 100 DMA.

So let’s briefly review the conditions that would, if met, suggest a reversal could be underway:

Increased volumes

A higher high

Move upwards and then re-test of old support

In this case, that would mean a sustained move above $4,200, a higher peak and then a bounce off that $4,200 zone again. We have not yet seen the higher high, volume is still unimpressive and there has been no ‘capitulation event’. For now, then, all we can say is that the bottom cannot be confirmed on the technicals.

That hasn’t stopped Crypto Twitter from calling it anyway. Sentiment has shifted, and lots of crypto media outlets are speculating that the bottom is in. This is, frankly, not great news. While they could be right, if they are it’s only by coincidence. The level of irrational optimism sets the market up for the opposite move, and it’s quite possible we’ll see a crash back down as hopeful longs are liquidated. Many respectable analysts are still pointing to a retest of the 200 WMA, and likely a fall below $3,000 before we finally see trend reversal.

In other news, Sparkpool has temporarily frozen the 2,100 ETH fee included with one of the transactions it mined. It seems most likely that the string of insanely high fees was the result of a badly-programmed bot being deployed on mainnet, rather than money laundering or (repeated) human error.

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