Bitcoin (BTC) is trading close to its 200 Week MA but things could soon get out of hand if the price breaks and closes below it. This is because in its entire trading history, Bitcoin (BTC) has never closed below the 200 Week MA. If something like that were to happen for the first time, it would be a major confidence breaker and it may take years or decades to restore faith in cryptocurrencies again. It would also make Dr. Craig S. Wright a lot happier as BTC/USD would have no reason not to fall towards zero should that happen. While it is true that nothing actually falls to zero. We still have Bitconnect priced at $0.67 and Bitcoin (BTC) could meet a similar fate as there will always be a significant number of people willing to store or use it.
Cryptocurrencies is a $100 billion dollars market with players like Goldman Sachs, NYSE and IBM indirectly increasing their influence through their subsidiaries. The only way Bitcoin (BTC) closes below the 200 Week MA is if all of these players were investing in this market to pull it down. Does it make sense? No, it does not. Now, these people are well aware of the implications of a close below the 200 Week MA and what it is going to lead to. If these players can manipulate price action on companies like Apple or Google, they can certainly manipulate the price action on a $100 billion dollar market. The point is, whatever happens, it is not going to happen without their consent. So, are they going to allow the sentiment to remain bearish for the next five years or so and lose their early movers advantage in this space?
All of these questions answer themselves and it is not hard to see why they would want to prevent something like that from happening unless they are prepared to lose their investments. Mainstream investors might have no problem holding most of their coins at major losses but these guys cannot do that. Furthermore, most of them have invested in companies that offer cryptocurrency services and not in cryptocurrencies themselves. So, while one Bitcoin (BTC) will continue to be one Bitcoin (BTC), one Coinbase will not be one Coinbase because a prolonged bear market gives new players the opportunity to enter this space and early movers lose their advantage and previously enjoyed monopoly.
One might argue that we have seen a close below the 200 Week MA on major forex pairs many a time and it had no significant consequences. For instance, in October, 2017 EUR/USD closed below the 200 Week MA and shot straight up in the weeks ahead and continued to rally till it topped out in early 2018. This was a false signal and professional traders expected it on EUR/USD because it had happened many a time in the past. However, with BTC/USD it is a different story and if something like this happens, it would be for the first time. When EUR/USD closed below the 200 Week MA in 1997, it entered a bear market for more than five years.