The price of Bitcoin is currently in a consolidation phase after formation of a recurring pattern twice within the span of a month. The current price of Bitcoin, at the time of writing, was $3,580, with the market cap hovering at $63 billion.
Bitcoin’s price action, as seen in the chart above, is the best example of history repeating itself. The overall trend of Bitcoin is a downtrend as it has consistently been forming lower lows as seen in the hourly charts.
There is a clear formation of a pennant in the price action chart, which breaks out to the top and then moves in a sideways fashion before dropping to retrace the same pattern all over again. However, it will be in a slightly lesser proportion compared to the one before.
Pennants usually show how the price gets caught up between forming lower lows as they head towards the peak of the pennant, where they have no more room, thus causing a breakout.
The first pattern started its formation on December 27, 2018, and it proceeded to ricochet between the trend lines consistently. The price broke out of the pennant pattern caused a massive spike of 6.56% as the prices rose from $3,838 to $4,090, The spike was followed by a sideways movement, which caused a sudden collapse in prices.
The sudden collapse in the prices took place in two distinct steps, which occurred at the 0.618 Fibonacci level. The 0.618 level or the 61.8% level is deemed as the most important level by most traders. The price drop happened from $4,026 to $3,618, making a pit stop at $3,812, which, in total, was a drop of 10.13%. By observation, it can also be noted that the second collapse was almost half of the first one.
The second pattern that formed, followed the footsteps of the previous pattern and the price broke out of the pennant at $3,625 and reached $3,728, which was a total percentage increase of approximately 3%, which is half of the previous breakout. This followed by yet another sideways/downtrend movement, which collapsed again at the same Fibonacci level as the previous pattern. The collapse took place from $3,689 to $3,514 with a stop at $3,587 at the 0.618 or 61.8% Fibonacci level. The total decline was 4.74%, which is approximately half of the previous collapse.
Moreover, before the formation of the second pennant, the sideways movement of the prices found support at 0.886 or 88.6% Fibonacci level of the first pattern which was eventually broken as the prices fell lower.
At the moment, the prices are being supported at the 0.86 or 88.6% Fibonacci level of the second pattern, which is at $3,514, a perfect correlation. If the prices ever decide to break below this support, there is going to be a collapse.
The one-day chart also shows a consistent downtrend with prices forming lower lows, indicating a strong bear trend for Bitcoin. Bitcoin’s fall into the abyss is currently being supported by two supports, the first and the imminent support is at $3,477, which was tested multiple times. The second support is the lowest that Bitcoin reached in 2018, which is at $3,139.
The volume indicator shows a very important indication of decreasing volume that has been in play since mid-November, which confirms that the price will undergo a massive and sudden change in the future.
The change, as per the technicals, indicates that the price should move downwards, however, the prices could go either way.
The Relative Strength Index also shows a declining trend, indicating that the selling momentum for Bitcoin is increasing.
The one-hour chart shows a recurring pattern in which the prices are being supported at the 0.86 Fibonacci level. If the price ever decides to drop to below the current support it would face the next immediate support at $3,136. In a worst-case scenario, the price would go into a free fall until $1,900 and the price was last seen at this point on July 14, 2017.
If the breakout happens to the upside then the price would have no resistance until $4,422 to $5,000, where the prices will be tested before it moves up. However, the one-day chart shows a declining volume trend, which indicates a strong movement in price that might happen in a few days.
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Bitcoin and Ethereum Classic find themselves on opposite ends of the 51% attack spectrum
Every revolutionary product comes with its own fallacy. However, to its internal metrics, in order for that product to remain adherent to the principle it hopes to expound, the cryptocurrency world is no less. Bitcoin [BTC] and other Proof-of-Work [PoW] cryptos have an in-built fallacy as well, the dreaded “51 percent attack.”
A recent study by cryptocurrency analytics firm LongHash, detailed the cryptocurrencies that are the closest to being subjected to the aforementioned attack.
The report looked at ten of the most significant PoW coins including, Bitcoin, Ethereum [ETH], Bitcoin Cash [BCH], Litecoin [LTC], Dash [DASH], Bitcoin SV [BSV], Zcash [ZEC], Monero [XMR], Ethereum Classic [ETC], and Bitcoin Gold [BTG].
Prior to detailing the study, Longhash listed out the two key points required to execute a 51 percent attack. First, a single mining pool/entity/individual would have to control over 50 percent of a network’s mining power. Second, the energy expenses related to the same, based on renting or sheer purchase of mining power.
Dividing the parameters of performance into two key parts, LongHash initially looked at the one-hour attack cost based on data from OnChainFX as on June 19, and consequently, the percentage of mining power available for rent on NiceHash. The matrix for an unsuccessful attack would be a high one-hour attack cost with low power availability, deeming the network “quite safe.”
Bitcoin took the top spot, with the report stating that there exists “very little power available to rent,” coupled with a “very high hourly attack cost.”
Traversing down the estimate cost Y-axis, several coins are scattered including, LTC, ETH, BCH, ZEC, BSV, DASH, and XMR, citing low power available via NiceHash. However, the estimated cost to rent the mining power is fairly low.
The report added,
“Most tokens, however, are clustered in the bottom-right corner of our chart, with low mining power availability and hourly attack costs north of $10,000, which makes them appear relatively safe.”
Moving horizontally further down the total mining power X-axis, BTG is the sole cryptocurrency exhibiting around 35 percent mining power availability on Nice Hash, with the lowest estimated cost to rent 51 percent of mining power for sixty minutes.
The biggest worry by far, was Ethereum Classic. The ETH hardfork had more than 80 percent of its mining power available on NiceHash, while the hourly attack was estimated to cost less than $10,000.
Earlier this year, the ETC network was the subject of a 51 percent attack, with several exchanges pausing ETC-related transactions in the process. The attack led to several cases of network double-spends and re-organisations totaling around $1.1 million or 219,500 ETC.
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