Bitcoin May Be ‘Permanently Impaired’
According to the financial analysis firm, what bitcoin is facing right now could be much more significant than just a brief bear run or a retracement.
Bitcoin may be facing an existential crisis, with its key year-to-date support level serving as the cushion between it and more substantial damage.
If BTC is to break that level, says Renaissance Macro Research, Bitcoin will be ‘permanently impaired’.
A July rally saw BTC top $8,000 for the first time in some time but shortly afterward the coin began a bearish run which saw it sink back below $7,000, and its current price is roughly 14 percent down on the same time a week ago.
On Wednesday August 7, it lost about 6 percent of its value following the news that the SEC (U.S. Securities and Exchange Commission) delayed a long-awaited decision on a proposed Bitcoin ETF.
This, however, could just be the tip of the pain iceberg for investors according to Renaissance head of technical research, Jeff deGraaf.
He told CNBC that if the psychologically important year-to-date support level is breached, he would recommend taking short positions on BTC.
Speaking to clients on Thursday, deGraaf said: “Parabolic moves are notoriously dangerous for short‐sellers.
“Usually a top develops that often appears as a descending triangle over months, with reduced volatility and little [fanfare].
“Once the top is complete on the support violation, the security in question can often be considered permanently impaired or even ‘game‐over’.
“We are of course referencing Bitcoin as exhibit ‘A’ in today’s market.”
Despite this, other analysts are urging investors not to overreact to the SEC’s refusal to grant a Bitcoin ETF.