Bitcoin took a tumble today, plummeting to a new five-month low. It is causing some consternation among analysts and traders and may be down to technical selling inspired by the rejection of the move towards $8400 earlier in the week.
The market has been waiting for a major move for a while as the completion of the descending triangle neared its conclusion. Of course with Mark Zuckerberg about to testify on Capitol Hill about Libra, you could draw some correlation between this and shakier sentiment towards cryptos more broadly, however such a conclusion appears quite tenuous.
The blowout has sparked a broad-based selloff in our other crypto markets with Ethereum, Bitcoin Cash, Dash, Litecoin and Ripple all down 7-9%.
Bitcoin futures slipped $500 in a matter of a few minutes, falling from $7950 to $7450 and are now testing the 200-day moving average around the $7400 level.
“One feels if that goes then there is more downside to be encountered with not a huge amount of support forthcoming until we find a $6k handle,” observes Neil Wilson, Chief Market Analyst at Markets.com “The 61.8% retracement around 7170 may offer support.”
What Bitcoin is testing now on the 200-day line is also the June low tested before the march higher to $13k.
There is a risk now that we close the gap back to the levels traded at before the gap higher in mid-May. The May-June tussle between bulls and bears has acted as a support area for this recent descending triangle but has now gone and the lows of that area are now being tested. The 14-day RSI indicates futures just entering oversold territory.