Bitcoin Price Fails to Fly Above $9,000 – All Over Again

  • Bitcoin failed to breach the $9,000-resistance fifth time in a row.
  • The cryptocurrency now eyes a steep downside correction, according to a historical indicator.
  • Its next drop could take the price as low as $6,300.
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Bitcoin corrected lower in early trading on Monday after failing to close above $9,000 fifth time in a row.

The top cryptocurrency established an intraday low near $8,533, down 7.27 percent from its local top above $9,200. So it appears, traders showed uneasiness towards entering new bullish positions above the $9,000-level. Meanwhile, those with short-term appetites preferred to exit their traders for interim profits.

The price action left bitcoin with two potential near-term biases: sideways and bearish. In the first case, the cryptocurrency could trend horizontally in a range defined by concrete resistance and support. The other situation could see traders liquidate their spot bitcoin position en masse, causing a moderate/huge drop.

bitcoin, btcusd, cryptocurrency, crypto

BTCUSD halts near $9,000 after testing its giant Descending Trendline resistance | Source: TradingView.com, Coinbase

Nevertheless, the technical readings warn about an imminent price shakedown. The recent bitcoin rally had the cryptocurrency retest its long-term Descending Trendline resistance. The price ceiling has capped bitcoin from extending its rallies since December 2017. One can see the pullbacks in the chart above to get a precise scenario.

Bitcoin’s latest pullback from the Trendline could, therefore, prompt another leg to the downside. Should it happen, the cryptocurrency would first test $7,727 as its next support level. But failing to hold it could crash the price as low as $6,400. From there, bitcoin could pullback to the upside to retest the Trendline.

The BTC/USD’s daily Relative Strength Indicator also points towards an imminent pullback. The momentum strength has entered its overbought area as of late that typically leads to a downside correction.

Halving, S&P 500

As technicals suggest a price correction, traders will be looking at bitcoin’s upcoming mining reward halving as a cue to enter bullish positions. The first halving saw the price explode from $12 in November 2012 to a top of $1,100 in November 2013. Meanwhile, the second halving saw it go up from $650 in July 2016 to $20,000 in December 2017.

The fractals alone hint that the third and the next bitcoin halving would yield similar returns for investors. Nevertheless, there is one big problem in the way this time.

So it appears, Bitcoin has formed a short-term positive correlation with the U.S. benchmark, the S&P 500 index. Both the markets have moved in sync following their crash in March. They plunged because investors liquidated them for cash liquidity amidst the fast-spreading Covid-19 pandemic. And they recovered after central banks introduced fiscal aids.

Macroeconomic analysts believe the S&P 500 has more room to fall after posting lesser-than-expected corporate earnings and the presence of “zombie” stocks. Fall in the traditional U.S. equities could lead investors to liquidate their bitcoin positions to cover losses.

Photo by Felipe Vieira on Unsplash

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