Bitcoin Cash's New Combo: Bull Exhaustion With Limited Downside?
Bitcoin cash is up again, after record price highs last week, but are the bulls running out of steam?
Bitcoin cash is buoyant again today, but some hints of bull exhaustion are starting to show.
At press time, the bitcoin cash-U.S. dollar (BCH/USD) exchange rate is $1,340. As per data from CoinMarketCap, the cryptocurrency has gained over 9 percent in the last 24 hours.
The gains come after record highs near $2,500 last week, reportedly due to a flow of money out of bitcoin (BTC) and into alternative protocols following the suspension of a controversial plan to alter the bitcoin's code. However, overbought technical conditions pushed prices back to $1,000 yesterday.
Still, dust now cleared, yesterday's pullback looks like nothing more than a normal technical correction, given that trading volumes dropped by 42 percent.
Despite the ups and downs, though, the cryptocurrency regained bid tone today, possibly on speculation that a successful outcome for a just-implemented hard fork of BCH may boost the protocol's appeal as a payment network. Also, a detailed look at the individual markets reveals the rally has been fuelled by Korean exchanges offering BCH/KRW pairs.
That said, the price action analysis indicates some bull market exhaustion, and the downside, if any, is likely to be capped at around $1,000 levels.
Yesterday's doji candle signals bull market exhaustion. An end of the day close below $1,000 would confirm a bearish doji reversal and open the doors for a pullback to $700 levels. The RSI is overbought as well.
As a result, a correction looks more likely, but the upward sloping 5-day MA and 10-day MA indicate any dips below $1,000 are likely to be short-lived.
Bullish scenario: a rebound from the rising trend line followed by a break above $1,549 would add credence to the basing pattern on the RSI and hint at a climb to $2,000 levels.
- The base appears to have shifted higher to $1,000 levels.
- A short-term correction is likely, though dips below $1,000 are unlikely to last long.
- On the higher side, a move above $1,549 would revive the bullish move.
Fast food combo image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, 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. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
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.