Bitcoin Trading Dumps [Analysis]: Learning From BTC’s Biggest Sell-Off Days In 2018


Bitcoin skyrocketed to $20,000 in 2017 before entering a lengthy bear market. However, this isn’t the first time bitcoin has taken a bearish turn. One analyst decided to check bitcoin’s previous “dumps” to see what the sell-offs can tell us.

Tom Alford at TotalCrypto.io analyzed bitcoin’s price action and recent sell-offs to determine what it means for the future of the world’s largest cryptocurrency. Alford analyzed large daily sell-offs, including single days where the price of bitcoin dropped significantly.

What do bitcoin’s recent “dumps” and sell-offs mean? Let’s take a closer look.

Bitcoin Dumps In 2018: The Biggest Sell-Off Days

Bitcoin reached its all time high in mid-December 2017. By the start of February, the price of bitcoin had dropped 60%. By early 2018, it was clear that bitcoin was entering a bear market.

Of course, we had seen similar movements in other years. Bitcoin’s price has historically risen towards the end of the year before dropping in the early months of the new year.

It’s now September, and bitcoin continues to be in the midst of a bear market. Bitcoin is hovering slightly higher for the start of September, with a price of around $7300 today. However, it’s far from a bull market.

Alford looked at bitcoin’s daily sell-offs to determine what it means for potential future sell-offs.

“We want to zoom in on the largest daily selloffs … this is a more telling story for daytraders and it allows us to more accurately cover the selloffs that were triggered by specific news stories. It will help you “understand how understandable” the recent selloffs were too experienced traders.”

With that in mind, let’s look at specific dates where bitcoin’s price dropped.

January 1

On January 1, bitcoin hit a high price of $14,112.20 before suddenly dropping to $13,154.70. The price of bitcoin bounced back the next day. However, bitcoin’s price had dropped 7% from the highest price of the day by the time the carnage as over.

What can we learn from news from that day? On January 1, the bitcoin community was swamped with bad news.

“Bitcoin Futures Fail to Live Up to the Hype,” wrote Forbes on January 1, 2018. That article referenced bitcoin futures contracts that had been trading for three weeks. The author awarded the bitcoin futures contracts a rating of “C-“.

“Bitcoin fever to burn out in ‘spectacular crash’,” wrote CNBC on that same day. “Bitcoin is Already Having a Bad Year,” chimed in Fortune.

If you were just looking at bitcoin news, then it would seem everything about bitcoin was very negative on January 1.

Interestingly, despite the negativity, bitcoin’s price rebounded in a major way on January 2. Bitcoin had a low of $13,163.60 during this day and rose to a high of $15,444.60. The price rose more on January 2 than it had fallen on January 1.

Despite this bull push, however, negativity forced bitcoin’s price lower. The brief bull push didn’t last, and bitcoin’s bear market continued.

Alford references technical analysis during this period. What was technical analysis saying when the price of bitcoin was so volatile? Here’s how Alford explains TA during this time:

“The entire bull flag forming the all-time high was voided in early January when the price stayed subdued in the sub-$11,000 price range. The upward push began when we broke through $12,000 and for a while it was viewed as a support. The lower second top gave us the start of a long-term descending triangle.”

Alford also references the “buy zone” target at $10,000. This buy zone was built for short-term traders – not long-term hodlers. Short-term traders would have been able to flip that BTC for a quick profit.

February 5

In the weeks following the January 1 and 2 volatility, bitcoin’s price dropped 50%. The price of bitcoin dropped $6,000 before rebounding to the $12,000 range – a temporary high that wouldn’t last.

On February 5, bitcoin experienced particularly severe price action, dropping from $8,000 to $6,000. Bitcoin lost 25% of its value in a single day.

What were the major news stories from that day? On February 5, we saw headlines like:

  • “China Enlists Its ‘Great Firewall’ to Block Bitcoin Websites”
  • Beijing bans bitcoin
  • “Bitcoin and other crypto coins fall to new lows”
  • “BTC falls as India plans to make it illegal as a currency”
  • “Behind the latest bitcoin plunge: a credit card ban”

At the time, technical analysis was suggesting that bitcoin’s downward trend would continue:

“All these negative announcements did was provide further confirmation that we entered into a downtrend. In fact, this $6,000 bottom plunge invalidated the bullish perspective for 99% of traders. That didn’t matter much though. The heavy drop from December’s high was met with a strong bounce. The market essentially went up 100% in only two weeks before coming back down.”

Other Notable Bitcoin Price Dumps In 2018

Bitcoin’s other notable price dumps in 2018 included:

  • January 29: Coincheck was hacked and lost $500 million, with price falling from $12,000 to $10,000
  • March 28: Analysts predict the death of bitcoin, prices fall from $7900 to $6900
  • April 24: Market bounces all month after “double bottoming” at $6400; on April 24, the price falls from $9600 to $8700
  • May 10: Bitcoin fails to break the uptrend line and wipes out its recent price gains; prices drop from $9,000 to $8300
  • June 9: News appears online suggesting that CFTC regulators are pressuring cryptocurrency exchanges; prices fall from $6700 to $5900
  • July 30: After bitcoin prices bottom below $6000, on July 30, markets tested the 100-day EMA on weekly and made a lower high, with prices falling from $8200 to $7600
  • August 8: The EMA crossover is rejected, sending us further down and adding to the descending triangle on the weekly, with prices falling from $6700 to $6100

Bitcoin Trading Dumps Conclusion

Ultimately, 2018 is proving to be a rough year for bitcoin. We’re in the midst of a bear market. As we enter the first half of September, bitcoin markets are nudging upward, with prices nearing $7400. However, some believe the bear market will continue towards the end of the year.

We’re at a turning point for bitcoin. By the end of 2018, we can easily see bitcoin being worth over $15,000 apiece. We can also see it being priced under $6,000. It’s tough to see where markets are going. However, Alford’s guide at TotalCrypto.io is a good place to understand crypto market movements – including what the latest sell-offs mean.

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