The huge losses sustained by Bitcoin over the weekend and into Monday have largely been reversed. President Trump’s decision to impose swingeing 25% trade tariffs on Canada and Mexico have been put on hold for 30 days. Bitcoin accumulation resumes.
Time to talk for Canada and Mexico
The Trump grenade, thrown into the market in the form of 25% trade tariffs on the United States nearest neighbours, has been defused for now. Both Canada and Mexico have agreed to bolster their border enforcement efforts in order to curtail illegal immigration, drug smuggling, and money laundering activities.
Both countries have a period of 30 days in which to broker deals that will head off tariffs that, if imposed, would severely impact their economies.
It’s starting to look like the Trump playbook of bargaining from a position of strength may bear fruit. The threat of such a tough sanction as a background to talks, is likely to have a wonderful effect in concentrating the minds of those doing the talking.
Tariffs on China remain
Meanwhile, the 10% tariffs on China remain as is, and come into effect on Tuesday. China has responded that it will discuss the unfair imposition of these tariffs with the World Trade Organisation, and will be imposing its own countermeasures.
Retail traders are flushed from the market
After a great recovery from the tariffs dump, the $BTC price is correcting again. This is all perfectly normal, unless of course you take into consideration the crazy volatility that has beset the crypto market over the last several weeks.
Spikes of between 5 to 10% in a day, and sometimes higher, are having the effect of washing many retail investors out of the market, probably never to return. One big mistake that many are making is that they are treating the crypto market as a ‘get rich quick’ scheme, and this has backfired on them.
For market makers, this is their bread and butter. Exchanges and OTC (over the counter) desks have seen their Bitcoin stockpiles reduce significantly over previous weeks and months, and therefore hunting down the stop losses or the liquidation levels of traders helps to flush them out of the market.
Bitcoin at the mid-range
Source: TradingView
The 12-hour chart above shows how the $BTC price recovered all the way up to the 0.618 Fibonacci before it was rejected. It is currently looking to hold support at $98,000. If this can be held, another go at the $102,000 resistance could be next. If on the other hand the price continues to correct, the top of the wedge could hold, which may coincide with the $95,000 horizontal support.
Bearish divergence is major concern
Source: TradingView
On the 2-week chart, it can be seen that there is some cause for concern. The price is still in an uptrend, while the Stochastic RSI and the Relative Strength Index are both trending down, thereby forming bearish divergence. On the 2-week chart this is no joke, and the only way to avoid this divergence playing out is for the Stochastic RSI to get back to the top, and for the Relative Strength Index to get above 88.00. This can take time.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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