Bitcoin price crash highlights fear of potential wider declines
Bitcoin prices have declined heavily over the past 24 hours. Why has that happened and is this the beginning of a wider bearish phase for the world’s largest cryptocurrency?
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Bitcoin has slumped into a three-month low today, with the cryptocurrency poster child finally exiting a symmetrical triangle that has been approaching its apex. Coming off the back of an incredible first half (H1) of the year, there is a case to be made that we could be seeing the reverse happen in the H2. Those first six months of the month provided 185% worth of gains, and while that has come to the benefit of hodlers, it also provides a significant area for bitcoin to move into within this current decline.
Lackluster Bakkt launch
There have been a number of claims over why this decline happened, with initial reasoning drawing conclusions that it is associated with a loss of confidence over the lackluster takeup of the new Bakkt platform. Bakkt offers physically-settled bitcoin futures, yet demand has been questioned with first-day volume of just 71 bitcoins.
$1.2 billion sale
Another potential reason behind this sell-off was a huge $1.2 billion sale as reported by Byte Tree. That jump in sales is part of a wider 24-hour period which saw a 164% rise in transactions totaling $5.3 billion.
Triangle breakdown for bitcoin
The weekly chart highlights the bigger picture for bitcoin, with the price finally breaking lower from a three-month symmetrical triangle formation. The decline through $9081 support solidifies that breakdown after the initial move through the ascending trendline. With the wider rally having topped out around the 61.8% retracement ($13,408), some will believe that we could see a return to the lows of 2018. However, that seems somewhat speculative, and for the moment it makes sense to look at this as a likely retracement of the 2019 rally. With that in mind, it makes sense to look at the retracement levels drawn from the $3136 low. Looking at those levels, we can see that the 50% retracement has already been overcome. That means we will be looking towards the 61.8% and 76.4% Fibonacci levels as the downside targets from here.
Looking at things from the daily time frame, we have seen the price drop into the 200-day simple moving average (SMA). That has been respected both yesterday and today. Watch for a break below that level for a bearish continuation signal.
Finally, the intraday picture is highlighted on the hourly chart, with the price turning lower in the wake of an overnight post sell-off rebound. A break through the $8794 level would bring about a more bullish picture, building on the respect of 76.4% Fibonacci support at $8267. However, with the 200-day SMA remaining a hurdle to the downside, the bearish trend would look more secure with a break below the $8105.
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