Bitcoin Price Risks Further Drop After Close Below $6K | Crypto News
Bitcoin (BTC) could post new 2018 lows over the weekend, having found acceptance below key price support.
Despite signs of a possible corrective rally seen earlier yesterday, the leading cryptocurrency closed below $6,000 for the first time since November 12, signaling a downside break of a major support (February low).
While the bears had briefly pushed prices down to $5,755 (2018 low) last Sunday, a close below $6,000 had remained elusive. Now that prices sit below $6,000, the focus is back on the long-run bearish technical charts, which continue to call a move lower to $5,000.
At press time, BTC is changing hands at $5,904 on Bitfinex – down 3.4 percent on a 24-hour basis.
Meanwhile, other cryptocurrencies are also flashing red this morning. Names like EOS, litecoin (LTC), cardano (ADA) are reporting 6 percent drops on a 24-hour basis. Ethereum (ETH) and XRP are down 4 percent each, according to CoinMarketCap.
Despite the drop below support, bitcoin is still outperforming most other cryptocurrencies and is now at 11th place on the list of best performing top-100 cryptocurrencies by market capitalization.
Clearly, investors have become more risk-averse, venturing out of high-risk cryptocurrencies and into bitcoin (and possibly then on to fiat currency). Consequently, the BTC dominance rate has climbed to 43 percent – the highest level since April 12.
Unfortunately for the bulls, the stage looks set for a further decline in bitcoin prices. Even so, the bears still need to keep their eyes open, as the unwinding of short positions ahead of month’s end and more importantly, quarter’s end, could again lift prices above $6,000.
The close below $6,000 support has bolstered the already bearish technical setup as indicated by the falling channel (series of lower highs and lower lows), downward sloping 5-day and 10-day moving average (MA).
Further, bitcoin is trading well below 50-day, 100-day and 200-day MAs, indicating that the long-term bias is bearish. What’s more, the long-term averages are aligned one below the other and are trending south.
The bearish sentiment is quite an obstacle to overcome right now, as the bullish price-to-relative strength index (RSI) and price-to-money flow index divergences seen earlier this week failed to yield a notable corrective rally.
Other indicators are also pointing to a strong bearish sentiment. For instance, the Chaikin money flow (CMF), an oscillator that measures buying and selling pressure, is printing negative values for the fifth consecutive week.
The drop below $6,000 also adds credence to the pennant breakdown seen in the weekly chart and the bearish crossover between the 5-month and 10-month moving average.
- Short-term outlook: Bearish, having closed below $6,000 yesterday.
- Long-term outlook: Bearish, as indicated by the pennant breakdown on the weekly chart.
- BTC could break below $5,755 (June 23 low) and could extend the decline towards the next major support located at $5,400 (November 12 low).
- Only a high-volume falling-channel breakout would confirm a short-term bearish-to-bullish trend change.
Charts image via Shutterstock