Bitcoin Slides Towards $8K Amid Market Slump

NEWS
Omkar Godbole
Feb 2, 2018 at 11:45 UTC  |  Updated  Feb 2, 2018 at 16:15 UTC

Down more than 25 percent week-on-week, bitcoin could be heading for its worst weekly loss since April 2013.

The sell-off gathered pace today with prices hitting a 10-week low below $8,100, but a relief could be in the offing, technical charts indicate.

Having breached the psychological support level of $9,000 earlier today, prices on CoinDesk's Bitcoin Price Index (BPI) fell to $8,056.51 at 11:39 UTC; its lowest level since Nov. 25. On a 24-hour basis, the cryptocurrency is down 14 percent, according to data source OnChinaFX.

Also, it is worth noting that BTC prices on Korean exchanges now trade at a discount to prices on western exchanges. For instance, BTC is changing hands at $8,227 on Coinbase's GDAX exchange, while on Bithumb, it's at $7,960. So, prices on Korean exchanges are trading at a discount of more than $250.

Till last month, the premium on Korean exchanges (known as the "Kimchi premium") was so high that it would distort the global average price of bitcoin. Thus, on Jan. 8 data source CoinMarketCap decided to exclude Korean prices from average calculations.

Bitcoin is not the only one taking a beating today. Ripple's XRP token has depreciated by 31 percent in the last 24 hours. Ethereum's ether token, bitcoin cash, NEO, and litecoin are down at least 20 percent each. Further, the total market capitalization of all cryptocurrencies together has declined by over $100 billion in 24 hours.

Since the start of the year, cryptocurrency markets have been hit by a string of negative news. For example, fears of tighter regulation in China and South Korea rocked the bitcoin freight train in January.

While things are looking bleak currently, the charts indicate there may be some glimmer of good new ahead.

Bitcoin chart

The above chart (prices as per Coinbase) shows-

  • BTC is fast approaching $8,052 (61.8 percent Fibonacci retracement of 2017 low to high).
  • The 200-day MA support is lined up at $7,855.
  • BTC risks breaching the falling channel on the downside.
  • The relative strength index (RSI) and stochastic show oversold conditions.

A daily close (as per UTC) below $8,052 would only strengthen the bears. It would also mark a downside break of the falling channel (represented by lines joining lower highs and lower lows).

However, as noted above, the daily indicators show oversold conditions. Further, the 4-hour RSI and stochastic also show the sell-off is overdone. Hence, BTC will likely defend the 200-day MA support seen at $7,855.

View

  • The sell-off could come to a halt in the range of $7,855 (200-day MA) and $8,052 (61.8 percent Fibonacci retracement of 2017 low to high).
  • Technical recovery could be seen, but gains above the $9,000 mark could be short-lived in the short-term.
  • Consolidation around $8,000 over the next 72 hours, if followed by a daily close (as per UTC) below the 200-day MA could revive the sell-off and open doors for $6,189 (Oct. 21 high).

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase and Ripple.

End of slide image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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