Bitcoin recently fell below a short-term rising trend line and appears to be in the middle of a retest. If the broken support holds as resistance, price could resume the slide to the Fibonacci extension levels marked below.
The 50% level lines up with support at the $6,100 area while the 61.8% level is closer to the swing low and $6,000 major psychological handle. Stronger bearish pressure could take bitcoin down to the 78.6% extension at $5,922.44 or the full extension near the key $5,800 floor.
The 100 SMA crossed below the longer-term 200 SMA once more, indicating that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse. These moving averages are also currently holding as dynamic inflection points near the broken trend line.
Stochastic is on the move down to suggest that sellers have the upper hand, but the oscillator appears to be bottoming out without reaching oversold levels. This indicates that buyers are eager to return and push price back up, possibly to the spike higher around $6,800 and beyond. RSI is treading close to overbought levels, though, and might turn lower to indicate a return in selling pressure.
The recent spike in bitcoin is being attributed to the selloff in Tether, as well as the launch of Fidelity’s institutional platform for bitcoin and ethereum. The latter could bring in stronger volumes and increased activity, which could potentially lift price all the way up until the end of the year.
According to Fidelity Investments Chairman and CEO Abigail Johnson in a press release:
“Our goal is to make digitally native assets, such as bitcoin, more accessible to investors. We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use.”