So much for the ongoing narrative that Bitcoin had established a firm bottom in November. The King of Digital Assets took another tumble today in its quest to refute any notion of a near-term bottom, although the long-term perspective has not changed and, in some ways, it has actually improved. Prior angst that PlusToken fraud may soon reappear in the form of BTC liquidation orders has not dissolved with the last news cycle. Ethereum took the first hit today, but Bitcoin followed its lead two minutes later.

For the past five hours, BTC has hung around $6,600, eyeing $6,500 and regions below. For the past two weeks, this area was cordoned off as a “true bottom” by a host of the more respected crew of analysts, but the “fix” was not in the cards. More information from the Chainalysis report about PlusToken conversions has come to light and delivered another “gut punch” to the crypto faithful. All cryptos are in free fall. Bitcoin is only one of many that are bereft of bulls and suffering from an attack of the bears.

The above daily BTC chart, courtesy of NewsBTC, outlines how we got to where we are today and gives a rather hopeful forecast of what might transpire, if a Santa rally takes over in a few days time. The “Bear Cross” in late October was certainly prophetic, charting a true course down a new diagonal line of support. The author of the chart expects a “bounce” to occur in short measure and then a rise to and through $7,500, which is now “formidable” resistance. The two golden lines or legs depict this thinking.

Volume declines are in line with seasonal effects, and the Relative Strength Index (RSI) is signaling that a “bounce” may truly be a possibility, if and only if Bitcoin marches in line with technical directives, a trait it rarely exhibits in times like these. The question is what will provide the fundamental force to drive such a prediction?

For the time being, we are stuck with the unexpected – more PlusToken liquidations. The Chainalysis report posits that $185 million in BTC have already occurred, and the fear is that more will come. The report reads: “We can say that those cash outs cause increased volatility in Bitcoin’s price and that they correlate significantly with Bitcoin price drops.” Today, we have the chart that demonstrates conclusively these correlations:

Analysts at NewsBTC add: “But the most fearsome takeaway remains the scammer’s likelihood of continuing the price dump. Chainalysis’s study shows that the entity still holds a massive stash of bitcoin that it might liquidate at a later stage. That raises the prospects of more price crashes unless there is an adequate demand to match the scammer’s supply flow.”

Can law enforcement use the Chainalysis data to nail down the un-liquidated tokens? Or will the crooks still on the lamb manage to push through significant conversions in the days and weeks ahead? These questions have plagued the Bitcoin faithful, as well as other impacted altcoin tokens. The slow descent of market values from late June would seem to suggest that conversions have been proceeding unabated, forcing prices lower.

A few of the news stories yesterday made the claim that a portion of the liquidations were being made through OTC trading desks, thereby circumventing “on-chain” volume transparency by being “masked” behind the broker’s OTC desk interaction with the actual market. Brokers tend to have account addresses that they manage on a “net” basis after aggregating trades from their respective client bases. Chainalysis would not be able to see these transactions, unless separate address destinations were maintained.

Is there any good news to report? Omkar Godbole at CoinDesk made the following observation: “While the cryptocurrency is losing ground, the number of bullish bets, as represented by the BTC/USD long positions on Bitfinex, have jumped to a record high of 44,523 contracts, surpassing the previous high of 40,193 reached in March 2018. Meanwhile, short positions have remained stuck largely in the 5,000–8,000 range.”

The senior analyst also noted that these “long” positions have increased 78% in just the past three weeks, but he counsels that this increase may be due to the general consensus that $6,500 represented a firm bottom. BTC is perilously close to testing this hypothesis. The concern is that if lower levels come into play, then a “long squeeze” may force more selling and exacerbate the selling pressure that already exists.

As CoinDesk relates: “Jacob Canfield, a guest trader on Forbes and CNBC, has forecast $5,500 as the bottom of the ongoing downtrend, which began from highs above $13,800 reached at the end of June.” Canfield is not the first to point to a lower bottom formation area. The technical chart presented earlier in this article telegraphs a declining diagonal that can be visually drawn by the eye to hit the $5,000 figure by March of 2020.

But what about positive pricing impacts leading up to the Bitcoin halving event in May? The ongoing debate of whether these “impacts” are already baked into BTC prices may be resolved sooner, rather than later. Stay tuned!