Make or Break? Bitcoin Risks Bear Revival Below $6.5K
A decline in bitcoin prices to $6,400 would turn the market in favor of the bears, technical analysis suggests.
Bitcoin (BTC) fell below the $7,000 mark on Wednesday, neutralizing the immediate bullish outlook.
More worryingly for the bulls, a further decline towards $6,425 (recent low) would turn the tide in favor of the bears, the technical charts indicate.
The cryptocurrency witnessed a head-and-shoulders breakdown at 09:00 UTC yesterday and fell to $7,000 (target as per the measured height method). The hourly momentum studies (moving averages) were aligned for a bullish move at the time, hence BTC was expected to defend the psychological mark.
However, the sell-off gathered pace early in the U.S. session, pushing BTC down to a low of $6,670, according to Bitfinex data. Interestingly, the drop in BTC prices coincided with a 500 point sell-off in S&P 500 futures.
Since late February, bitcoin and U.S. stocks have been moving more or less in tandem, indicating the cryptocurrency is still being perceived as a risk asset.
By the day's end, U.S. stocks had turned positive, yet bitcoin fell further to $6,565 in the Asian hours before regaining some poise. As of writing, BTC is changing hands at $6,847 on Bitfinex.
While the retreat to $6,565 has turned the tide away from the bulls, all is not lost. A close today (as per UTC) above the 10-day moving average would still boost the odds of an upside break of the falling channel (seen chart below).
The 5-day moving average (MA) is flatlined (neutral) and the 10-day MA is biased to the bears (sloping downwards).
A close above the 10-day MA, currently seen at $7,148, would signal the sell-off from $11,700 (March 5 high) has ended at $6,425 (April 1 low) and will likely yield a bullish falling channel breakout.
The channel resistance is seen sloping downwards to $6,600 in the next 24 hours. An upside break of the falling channel would confirm the short-term bullish trend reversal.
- The immediate outlook is neutral.
- A close above the 10-day MA may result in a bullish falling channel breakout.
- A break below $6,425 (April low) could yield a drop below $6,000 (February low).
- A further drop towards the falling channel support of $5,450 cannot be ruled out, as the daily relative strength index shows sufficient room for another $1,000 drop in prices.
Chart 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.