Its rare that one could anticipate an instrument’s price path. But I managed one such lucky feat this week.
In yesterday’s piece on Bitcoin, I anticipated that that BTC’s “volatility is likely to spike at any time. Prices could jump then correct sharply.”
This is exactly what happened on Wednesday. During the session, Bitcoin extended its rally all the way to near $14,000 before it plunged $2,000 in less than one hour, on huge volume (see chart below, 30-min interval). Note BTC was trading less than $3,500 just a few months back.
What next? A sudden plunge like that is going to damage traders’ confidence, at least over the short term. Prices are likely to exert downward pressure as some long positions are exited. But technical support levels are noted at $11,000 and $10,000. The latter is a major round number support. Volatility is likely to remain elevated.
Turning to the general stock market, it is noted that major indices are vulnerable to near-term weakness. This is due to geopolitical tensions in the Middle East (Iran) and the bickering between White House and the Fed (e.g., Trump’s latest accusation here). The S&P 500 Index made a marginal new high recently. But if the index fails to hold the high ground, this could turn into a ‘failed break’, with near-term negative repercussions.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.