It’s been quite a fortnight, but we’re now staring at a moment of choice for bitcoin.

After last week’s incredible spike upwards, we might have expected bitcoin to correct immediately. In fact, after some initial volatility, it actually pushed higher – topping $5,466 (Bitstamp) on Wednesday afternoon.

Given that all the indicators on the longer-term timeframes were already screaming overbought, this was remarkable. Predictably, it was only a short-term move to the upside, and yesterday saw the sell-off we expected from that, bringing the price back down to its current level of just over $5,000.

This a key line for bitcoin, since that original move higher took BTC above $5k. The question now is whether it will hold onto gains, or whether it will retrace further – potentially a lot further. There’s a case for suggesting we will retest the $4,200 line that proved strong resistance, and that may be support now. If that fails, then there is a serious question mark over whether the bear market is, indeed, over. If BTC falls back into its previous range, then this looks like a manipulation spike (powered by that mystery 20,000 buy) or the end of a fourth wave in an Elliott wave cycle – with a final fifth wave to play out lower.

Leading analysts are divided on this. Tone Vays is bearish, still expecting sub-$3k prices and a bottom sometime in the autumn. Alessio Rastani is similarly bearish, having called for a relief rally to $5,000 before this happened. Others like Willy Woo and Murad Mahmudov believe the bottom is in for bitcoin.

Right now, at the time of writing, BTC is holding $5,000 – just – having dipped below it recently. Despite the fall from almost $5,500, RSI for the daily has only just dropped out of overbought territory, indicating just how significant that move higher was. 50 and 200 moving averages for the daily are converging, and a ‘Golden Cross’ (the opposite of the Death Cross we saw last April) will occur in the near future unless there is another significant move to the downside. Price is currently well above the 200 MA.

It has been a tough week for alts, with heavy losses, powered by BTC’s falls. Alts traders are clearly looking to BTC for cues about the direction the market will take, and hedging for what they believe may happen next.

And whatever happens next will be significant – whichever way the market decides to go.

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