Bitcoin recently broke below its descending triangle support around the $9,350 level to signal that a decline of the same height as the chart formation is likely to follow. The triangle spans $9,350 to around $13,500.
The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to gain traction. The gap between the indicators is widening to reflect increased bearish momentum while the 100 SMA is close to the broken triangle bottom to add to its strength as resistance in the event of a pullback.
RSI is in the oversold region and is turning higher to signal that bullish momentum might be returning. Stochastic is also in the oversold territory to reflect exhaustion among sellers and a possible return in buying pressure. In that case, bitcoin might still be able to pull up to the area of interest to gather more selling energy.
BTC/USD Chart – TradingView
The recent sharp decline in bitcoin is being pinned on the launch of Bakkt futures as investors had been anticipating a similar reaction to that of bitcoin futures launched on CME and CBOE in late 2017. It didn’t help that the investor reception of these products was seen as lackluster.
With that, some are expected FUD (fear, uncertainty, doubt) to keep weighing on the digital asset in the weeks or even months ahead. Bitcoin has already had trouble creating new highs, so the break lower could convince more traders to close out their holdings.
Still, keep in mind that the mining rewards are due to be cut in half by early next year, which could potentially lead to at least double the value of each coin. This isn’t due to happen until May 2020, though, so there could still be some room for bitcoin to fall.
Images courtesy of TradingView
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