BTC/USD

Bitcoin markets fell during the trading session on Tuesday, breaking down to the $6000 handle. This was an area that had been targeted previously, going back several months. We have wiped out most of the move from the mania and have bounced enough to form a hammer at the end of the day. While this is a good sign and volume was good as well, the biggest concern I have is that we have formed hammers along the way and continued to fall. I also suspect that there’s been enough psychological damage done to the retail traders that even if we do bounce from here and continue the move higher, it’s probably going to take years to get past what just happened.

BTC/JPY

Bitcoin fell against the Japanese yen as well during the trading session, reaching as low as ¥700,000 at one point, before bouncing to close near the ¥800,000 level. A break above the ¥800,000 level would be a bullish sign and could perhaps in the market back to the ¥1 million level. Again, although volume was good, and the candle shape is strong, I believe that there’s been enough psychological damage done to this market that it may take years to recover, and most certainly months at best. Because of this, if you wish to buy Bitcoin that’s one thing, but you need to understand that this is a long-term play, not some type of short-term trade. If we were to break down below the bottom of either hammer, that would almost certainly bring disaster.