The past two days have seen a significant market slump that has made Bitcoin (BTC) lose over 4% from the recent highs. Although some analysts and experts remain bullish about the crypto market, the fall of Bitcoin has resulted in a considerable drop of almost all the other altcoins to lower levels.
Nonetheless, BTC bounced off from there and is currently trading at $11,680 (on Bitstamp). Ethereum has lost around 5% to reach $390, Ripple (-4%), BitcoinSV (-7%), Bitcoin Cash lost (-5%), Chainlink (-8%), Litecoin recorded (-6%), and Binance Coin (-5.5%) from the top 10.
Tezos, TRON, Monero, NEO, and Cosmos from the top 20 cryptos lost about 11% to 15%. OMG Network sheds around 25% after enjoying a massive surge on August 20. Qtum dropped (-23%), Band Protocol (-15%), Swipe (-21%), Status (-18%), Terra dropped (-14%), and iExec RLC (-12%).
Currently, Bitcoin is trading around $11,580. The whole crypto space took a direct hit and there is still confusion on what will happen next. However, most analysts, experts, and commentators believe that the bears will rule in the short-term.
The latest turmoil might have been caused by the strengthening dollar and investors shifting to the risky assets away from gold and other haven assets. As it is the case that happens, gold also experienced a price drop on August 21 from $1,950 to record a daily low at $1,910. But, the bullion recovered rapidly to settle around $1,940. That recovery is similar to Bitcoin’s recovery to $11,570.
Other analysts think that the recent drop resulted solely from technical moves in the market. While on its way down, the flagship cryptocurrency broke the $11,650 support level which it now seems to be striving to regain. From that point onwards, it has relied on $11,300, $11,150, and $11,000 zones that are expected to hold if it dives further.
Currently, the best explanation is that the sell-off in the crypto market was caused by a drop below $11,650. It triggered off a sell-off in the altcoin market which investors are now trying to exploit through buying the dip. Thus, many believe that it is a normal correction from the recent strong bullish trend recorded in the market.
Although it was just to a lesser extent, most of the major altcoins are in the red against Bitcoin (BTC) too. Hence, Bitcoin’s dominance has increased in the past 24 hours to reach 59.5% after dumping to 58.7% yesterday. The cumulative crypto market cap now stands at around $360 billion.
After trading within a range and failing to sustain a move above $12,000, the weekly chart broke slightly bearish. All the oversold bounces under $11,650 have now become lower highs. Thus, a bounce above this level is needed to restore the uptrend that has developed in recent weeks. But, that is quite unlikely unless bitcoin breaks above $12K and remains there.
If the flagship cryptocurrency breaks above $12,500 the next resistance has formed around $13,200. But, anything could happen with the volatility associated with the crypto market put into context. The MACD has already made a bearish cross and the RSI has smashed its persistent flatline dipping to the oversold territory.
Analysts are yet to determine the cause of this plunge but it is evident that the $12,000 resistance zone has held multiple times in recent weeks. Bitcoin’s inability to overcome the overhead resistances shows a considerable underlying weakness. A further dip might be imminent before the price rises above the $12,000 psychological zone.
$11,130 and $10,560 are the next supports that might come into focus. Analysts will determine the psychological supports and resistances in between the new range that has formed as the trend forms in the coming few days.
In the daily chart, the first target of $11,300 support level was not breached as the BTC price dropped to $11,380 before rebounding towards $11,600. Currently, the $11,500 – $11,600 might hold as a strong support. Looking at the recent critical levels, the other notable support zones have formed at $11,300, $11,150, and $11,000.
Alternatively, if the asset heads upwards, it must surge above $11,800 before going against $12,000, $12,100, and $12,400. If these levels are broken, the bulls will be ready to take over the market and dominate in a bull run. The Relative Strength Index (RSI) indicator and the Scholastic RSI oscillator are stuck at bottom levels.
Based on this chart, the lack of strong resistances below the $11,550-$11,400 zone let Bitcoin plunge to the lower level that it reached before rebounding. The current downtrend is still young and bears are not yet in full control. The Stoch, RSI, and MACD may quickly become extremely oversold which may account for the rebound experienced in the market.
For now, if you are not a gambler or a risk-taker, you can watch in the sidelines until the market takes a definite trend. But, if you have a crypto trading bot, the volatility might bring some passive income for you are the bulls and bears battle for supremacy in the market.
Currently, all technical analyses indicate that Bitcoin has reached a fragile point. The crypto is in a situation where if a major breakdown happens it might drop towards $10,500. If the support levels rise, an upward trend may be developing. But, the current situation indicates that the bulls are still fighting the bears with each group aiming to take over the market for the short and near-term.