It has been a rough week for Bitcoin. The benchmark crypto rallied to highs of $9,800 just a few short days ago before once again being met with massive selling pressure that caused it to slide lower.
The mixed price action it has seen in recent times is strikingly similar to that seen in the traditional markets, suggesting that it may remain highly correlated to stocks and other mainstream assets.
At the moment, BTC does appear to be in a precarious position.
It is currently attempting to hold above the lower boundary of its long-established trading range, although the support at this level appears to be growing increasingly weak.
It now appears that there are three factors that all distinctly suggest that Bitcoin has entered a downtrend and that further downside could be imminent.
This comes as analysts are noting that its reaction to a potentially imminent visit of $8,600 could determine its fate in the days, weeks, and even months ahead.
At the time of writing, Bitcoin is trading down just under 1% at its current price of $9,070.
BTC has been trading around this price level for the past couple of days, but its inability to push into the mid or upper-$9,000 region does seem to point to underlying weakness amongst its buyers.
Just a couple of days ago, sellers forced it as low as $8,900. There was, at the time, heavy buying pressure at this price level.
As NewsBTC reported over the weekend, from a mid-term standpoint, Bitcoin’s trend in the coming weeks may depend on its reaction to $8,600.
One analyst spoke about the importance of this level, explaining that an ardent defense of this level could be enough to push BTC up to $10,500. In contrast, a decline beneath it could invalidate its multi-month uptrend and force it significantly lower.
“Bitcoin: All depending on holding $8,600-8,800. If we do, we’ve got a hidden bullish divergence (I don’t do much with them regularly). And another HL. The next test of $10,500 = very likely breakout. Losing $8,600 -> invalidation,” he said.
Image Courtesy of Crypto Michael. Chart via TradingView
It does appear that Bitcoin may already be in a downtrend, despite it still trading within its long-held trading range.
Data platform Coinalyze spoke about this possibility in a recent tweet, explaining that there are three factors supporting this notion.
They note that a falling price coupled with growing open interest and a falling Cumulative Volume Delta (CVD) signals that further losses may be imminent.
“Bitcoin 4h: Theoretically this is a strong downtrend. Price fall + OI grow + CVD fall = strong downtrend,” they noted.
Image Courtesy of Coinalyze.
Featured image from Shutterstock. Charts from TradingView.
Published at Mon, 29 Jun 2020 21:00:47 +0000