The past week has seen a severe market slump that has made Bitcoin (BTC)[crypto coins=”BTC” type=”text” show=”percent”] lose over 80% from the December 2017 peaks. Although some analysts and experts remain bullish about the crypto market, the mighty fall of Bitcoin[crypto coins=”BTC” type=”text” show=”percent”] has resulted in the significant drop of almost all the other altcoins to new low levels. Some have lost up to 95% from their 2017 peaks.
Currently, BTC[crypto coins=”BTC” type=”text” show=”percent”] is trading around $5600. The entire crypto market took a direct hit and there is still confusion on what trend it will take although the prevailing leaning is strongly bearish.
Experts and analysts are still trying to determine the root cause of the latest turmoil. Some think that the BTC[crypto coins=”BTC” type=”text” show=”percent”] plummet resulted from the worries surrounding the split of Bitcoin Cash (BCH)[crypto coins=”BCH” type=”text” show=”percent”], currently ranked as the fourth-largest digital currency. Others think that the sharp decline resulted solely from technical moves in the market.
BTC[crypto coins=”BTC” type=”text” show=”percent”] could not get support at the psychological $6,000 mark. At the moment, the best explanation is that the extensive sell-off was caused by the breach of $6,000 representing a stop loss trigger. Also, the BCH[crypto coins=”BCH” type=”text” show=”percent”] hard fork is blamed for exerting excessive pressure on a fragile BTC[crypto coins=”BTC” type=”text” show=”percent”] price.
This week’s sharp correction dropped Bitcoin[crypto coins=”BTC” type=”text” show=”percent”] to a 12-month low shedding off market capitalization to below $100 billion for the first time since November of 2017. Moreover, the cumulative cryptocurrency market cap also declined to levels below $200 million for the first time in 2018.
After a long series of sideways trading, the weekly chart broke bearish. All the oversold bounces under $6,540 have now become lower highs. Thus, around a 15% bounce is necessary to restore the BTC[crypto coins=”BTC” type=”text” show=”percent”] price to where it was before the plunge. However, that is highly unlikely in the short-term based on the last 4-6 months of trading.
Anything could happen with the Bitcoin Cash[crypto coins=”BCH” type=”text” show=”percent”] hard fork put into context. The MACD has already made a bearish cross and the RSI has broken its unrelenting flatline dipping to the oversold territory. Although many analysts attribute the current volatility to the BCH[crypto coins=”BCH” type=”text” show=”percent”] fork, it is evident that BTC[crypto coins=”BTC” type=”text” show=”percent”] had dipped below $6,100 often.
Bitcoin’s inability to overcome the new overhead resistances shows a significant underlying weakness. Although the sharp decline caught the markets by surprise, the dip below $6,000 seemed unavoidable. $4,500 and $3,000 are the next supports that have come into focus. Analysts will determine the psychological supports and resistances in between the new range as the trend forms in the coming few days.
In the daily chart, the first target of $5,300 support level was quickly reached during this week’s market plunge. Currently, the $5000 – $5300 might hold as a strong support. Based on the critical levels from 2017, the other major support areas are pegged at $5000, $4500 and $3700. A further downward movement will find $2700 – $3000 as the possible bottom.
On the upside, the resistance levels are pegged at the Fibonacci retracement level %38.2 ($5,650) and around the $5700 – $5800 area. That region was a support that has now turned into a tough resistance. $6,000 is the next considerable resistance that was previously an unrelenting support. The Relative Strength Index (RSI) indicator and the Scholastic RSI oscillator are stuck at bottom levels.
The daily volume recorded after the crash hit highest levels since April 25, 2018.
In this chart, the lack of strong resistances below the $6,200 – $6,100 zone let Bitcoin plummet to levels lower than it was in November 2017. The current downtrend is still young and bears are in full control. The Stoch, RSI, and MACD may quickly become extremely oversold and since the Bitcoin Cash feud may be fuelling the downturn, analytical charts may offer finite value for now.
For now, the most prudent strategy to take is to watch from the sidelines until the market takes a definite trend.
This chart is forming a mini-trend line. However, it is only a correction until the volatility continues. The RSI is flirting with the support turned resistance but the bullish traders hope that a positive correction will continue.
Although the BTC price slipped by just 1% on Friday, the prevailing price action signifies danger. The BTC/USD market is trending within a consolidation block that may signify a looming extended move downwards. The 1-hour view has revealed that the price action has developed a bearish pennant.
Currently, all technical analyses show that Bitcoin[crypto coins=”BTC” type=”text” show=”percent”] has reached a considerable fragile point. BTC is in a situation where if another breakdown occurs, it might reach the $2,700 – $3,000 zone. If the supports rise, it depicts an upward market trend. However, the current situation shows no evidence of the Bitcoin price moving upwards.