Bitcoin Outlook Sours As Price Sheds 70% of Recent Rally

Bitcoin's price has surrendered more than 70 percent of the rally seen in July, putting the bears in a more commanding position.

AccessTimeIconAug 8, 2018 at 11:00 a.m. UTC
Updated Sep 13, 2021 at 8:15 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bitcoin's recent downtrend has deepened in the wake of a decision by the Securities and Exchange Commission (SEC) to delay a ruling on a keenly awaited bitcoin ETF.

The leading cryptocurrency was expected to stage a minor corrective rally in the last 24 hours, having defended the key 50-day moving average (MA) support earlier this week.

However, the sellers made a strong comeback above $7,100 after the SEC exercised its right to postpone the decision on whether to approve a rule that would allow Chicago Board Options Exchange (CBOE) to offer shares of a bitcoin ETF issued by VanExk SolidX Bitcoin Trust.

As a result, BTC closed (as per UTC) yesterday on a negative note at $6,719 and fell to $6,360 today – the lowest level since July 16. At press time, BTC is trading at $6,500 on Bitfinex.

The 7.9 percent sell-off witnessed in the last 24 hours reinforces the view that a major part of the rally seen in July was likely fueled by speculation that a Bitcoin ETF could be approved by the US SEC within weeks.

Further, the bear grip around bitcoin has strengthened in the last 24 hours as bitcoin's drop to three-week lows below $6,400 means the cryptocurrency has retraced more than 70 percent of July's rally to $8,507.

Still, as the SEC has merely delayed its decision until September, there is still a chance that the ETF could be approved next month.

Daily chart

download-9-17

BTC's break below the ascending trendline (drawn from the June 29 low and the July 12 low) has bolstered the already bearish technical setup.

For example, the 5-day and 10-day MAs are sloping south in favor of the bears, and BTC is trading well below the long-term MAs (50-day, 100-day, and 200-day) – all suggesting the path of least resistance is to the downside.

More importantly, perhaps, the relative strength index (RSI) is holding below 50.00 (in bearish territory), but has yet to hit oversold territory (below 30.00). Hence, there is scope for a further drop towards $6,000, albeit after a minor bout of consolidation as the short-duration technical charts (below) are reporting oversold conditions.

4-hour chart

download-8-17

On the 4-hour chart, the RSI has dropped below 30.00, signaling the sell-off is overdone. As a result, BTC could trade sideways within a falling channel over the next day or two.

View

  • BTC's drop to three-week lows below $6,400 has likely strengthened the bear grip and opened the doors to $6,000 (psychological support).
  • The cryptocurrency might consolidate around $6,500 in the next 24 hours, as suggested by the 4-hour chart, before resuming the sell-off.
  • Only a high-volume break above the falling channel seen in the 4-hour chart would shift risk in favor of a re-test of $7,200 (200-candle MA).

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; Charts by Trading View

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.