- Bitcoin has dropped to 10-day lows, bolstering the case for a test of support at $8,000.
- Short-term indicators are signaling a strengthening of downside momentum.
- A move above $8,800 is needed to revive the bullish setup.
Bitcoin’s price pullback has gathered steam in the last 24 hours, erasing a major portion of the cryptocurrency’s recent gains.
The top cryptocurrency dived out of the $8,460–$8,750 congestion zone during the European trading hours on Thursday, signaling a continuation of the pullback from Sunday’s high near $9,200.
So far, the follow-through to the range breakdown has been bearish. The cryptocurrency fell to $8,230 soon before press time – the lowest level since Jan. 14, according to CoinDesk’s Bitcoin Price Index.
Notably, bitcoin has now erased nearly 40 percent of the rally from $6,853 to $9,188 witnessed in the 17 days to Jan. 19.
bitcoin is now down 10 percent from the recent high of $9,188 and is reporting
a 3 percent loss on a 24-hour basis.
All that said, prices are still up 15 percent on a month-to-date basis. That number, however, could decrease over the next couple of days, as the short-term charts are indicating bearish conditions.
Bitcoin fell 3.21 percent on Thursday, its biggest single-day decline in over a month, and closed (UTC) below $8,460, confirming the reversal lower signaled by the big bearish outside day candle created on Jan. 19.
downturn in price is backed by bearish readings on key indicators.
For instance, the MACD histogram is now producing deeper bars below the zero line, a sign of the strengthening of bearish momentum. Meanwhile, the 14-day relative strength index has dived below an ascending trendline.
All in all, BTC looks set to extend losses toward the psychological support of $8,000. A violation there would expose the 50-day average support at $7,678.
The bearish case put forward by Thursday’s range breakdown will remain valid as long as prices are held below $8,460, the level which capped downside multiple times in the first half of this week.
A bullish revival would require prices to cross $8,750 on strong volumes. That would open the doors for a re-test of recent highs near $9,200.
Disclosure: The author holds no digital assets at the time of writing.