Bitcoin Price Loses 10% In August But Long-Term Bottom May Be In

Omkar Godbole
Aug 31, 2018 at 11:00 UTC
Updated Sep 2, 2018 at 10:31 UTC
markets

Bitcoin (BTC) is all set to end August with double digit-losses, but a closer look at the price action suggest better times lie ahead for the leading cryptocurrency.

At time of writing, BTC is trading at $6,940 – down 10.7 percent from the month’s opening price of $7,727, according to CoinDesk’s Bitcoin Price Index. However, losses would have been much bigger had prices not recovered from the six-week lows below $5,900 seen on Aug. 14.

Indeed, the bitcoin market has witnessed a solid two-way business this month.

Sellers dominated the first half as the markets reacted to the US Securities and Exchange Commission’s (SEC) disapproval of a Winklevoss bitcoin exchange-traded fund (ETF) in late July. However, by mid-August, the bears had run out of steam and the technical charts were calling for a corrective rally. Accordingly, BTC picked up a bid and moved above $6,400 in the third week.

Notably, the short-term bullish reversal signals gained more credence after the cryptocurrency shrugged off the SEC’s rejection of nine other ETF proposals on Aug. 22.

Further, BTC/USD short positions in the futures market hit record lows, signaling the sell-off from the record high of $20,000 set in December likely ended around the psychological support of $6,000.

Consequently, the emboldened bulls pushed BTC to highs above $7,000 earlier this week.

So, while BTC is reporting a 10 percent monthly loss overall, the technical charts indicate there is a reason to be optimistic going forward.

Monthly chart

As seen in the above chart (prices as per Bitfinex), a long wick (tail) is attached to the current monthly candle, which is widely considered a sign of trend weakness – that is, the bears failed in their attempt to push prices back to the June low of $5,755 and the bulls regained some lost ground.

Further, the bears have failed three times in the last 10 weeks to keep the cryptocurrency below the support at $6,000.

So, it seems safe to say the cryptocurrency has likely charted a long-term bottom around $6,000 and hence prices could revisit July highs above $8,500 in the next month or two.

View

  • Bitcoin’s long-tailed monthly candle indicates the long-term bear market likely bottomed out around $6,000.
  • A break above the July high of $8,507 would confirm a bullish reversal.
  • A monthly close below $6,000 (major support) would signal a revival of the sell-off from the December high of $20,000.

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

Bucket bottom image via Shutterstock; Charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.