Tariffs Keep Markets In Check. BTC Back to October Lows
Key Support Lost. Regaining $112K Is Crucial For Bitcoin
The crypto market is still recovering from the flash crash seen last Friday, and it looks like the bears are in control of short-term price action. The sentiment improved earlier in the week when Fed Chair Jerome Powell offered strong clues that the central bank will cut rates again this month. However, this was not enough to shake out the bears.
Amid the U.S. government shutdown and the escalating trade war between the U.S. and China, things are not looking rosy for cryptocurrencies and the market in general. After President Trump threatened 100% tariffs on China last Friday, the crypto market dropped furiously, wiping out over $19 billion in leveraged positions. When asked by a reporter whether the United States and China are headed for a lengthy trade war, the President replied, “Well, you’re in one now”. The meeting between the U.S. and China leaders is still on the table for later this month. The tariff pause ends on November 10, which means there is still time for an agreement to be reached.
The generally agreed-upon reason for last week’s flash-crash is Trump’s tariff announcement, but maybe there is more to it. The crash happened during the Asian trading session, which is known for its low liquidity. When liquidity is low, a sudden influx of big orders has a larger impact than usual, so in theory, a whale (or group of whales) could drive the price more easily in the desired direction. The shorts snowballed, taking out any stop losses in the process, and amplifying the extent of the drop. So, while there was a fundamental reason behind the drop, it was not the only catalyst.
Chart Analysis – BTC/USD
At the time of writing, the bulls have lost the battle for $112K, which acted as a strong barrier in the past. Moving above this key level would send BTC back inside the parallel channel, which confined the pair for a few months.
In late September, the bears breached this channel, but it turned out to be a false break, which triggered a rally to the new ATH at $126.2K. A move back inside the channel could spark buyer interest, and a potential move towards the upper barriers like $116K and $120K.
If a move above $112K doesn’t happen fast and with volume, Bitcoin is in jeopardy of falling towards the lower Bollinger Band and the support around $105K.
