Bitcoin just can’t seem to catch a break these days as it once again found itself nearing long-term support at $6,000. A break below this region could mean a prolonged decline for the cryptocurrency.
The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, the drop is more likely to persist than to reverse. However, the gap between the moving averages has narrowed to signal weaker bearish momentum.
RSI is also dipping into oversold territory on its move down, suggesting that sellers could soon take a break and allow buyers to take over. Stochastic is also indicating oversold conditions and looks ready to turn higher soon, possibly taking bitcoin along with it.
In that case, bitcoin could recover to the nearby inflection points at the moving averages. It could also revisit the latest highs around $8,500, but it’s also worth noting that lower highs were seen since the beginning of the year.
Many say that the reason for the latest slide was the SEC announcement to delay their decision on bitcoin ETF applications for September. However, this news actually broke out earlier on and it was likely the prevailing FUD (fear, uncertainty, doubt) sentiment that drew more sellers in.
Besides, risk aversion has returned to financial markets on China’s announcement that they would match the latest set of tariffs to be imposed by the US on August 23. This has led to more safe-haven flows and unfortunately, bitcoin has been moving to the tune of risk sentiment as well.
With that, traders dumped riskier holdings like cryptocurrencies and returned to lower-yielding assets in anticipation of more uncertainty for businesses. Traders might hold out until the actual SEC decision on bitcoin ETFs before pushing this coin in a particular direction.