Bitcoin gold (BTG) may have leapt up in the token rankings, but its gleam may soon dull, the price charts indicate.

Notably, the new cryptocurrency, a bitcoin spinoff with a protocol designed to make mining more democratic, has now become the fifth largest cryptocurrency by market capitalization.

Yet, despite a rally to a high of $413.74 on Nov. 24, and a doubling of prices since Nov. 19, BTG faces plenty of skepticism in the investor community over its real-world role. Comments on social media indicate the investors feel the token is overvalued, with few (or no) apparent use cases.

As a result, the gains to over $400 look to be speculative in nature, unless traders are anticipating use cases to appear.

The price action analysis, though, indicates a correction may be on the way.

At press time, BTG is at $361 – up 4.5 percent for the day, as per CoinMarketCap. Over seven days, the cryptocurrency is up 185 percent.

4-hour chart

The above chart shows:

  • A bull flag breakout followed by a rejection at the rising trendline hurdle.
  • The relative strength index is losing altitude, signals bulls are losing control.

A bull flag breakout is a continuation pattern ( i.e. an upside break yesterday meant the rally from the low of $150 has resumed). However, prices failed to cut through the resistance offered by the rising trend line.

View

The weak follow-through to the bull flag breakout indicates exhaustion, and suggests the potential for a drop to $250 levels in the short-run.

However, a break above $400 in the next 12 hours could yield a rally to fresh record highs above $480 levels.

Gold pan image via Shutterstock

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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.

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.