Bitcoin Price Analysis

Bitcoin (BTC) Price Analysis: Next Downside Targets

Bitcoin recently broke below support around $6,400 then dipped to $5,800 before making a pullback. The broken support held as resistance and price is now setting its sights on the next downside targets.

Applying the Fibonacci extension tool gives an indication of how low bitcoin could go. The 38.2% extension is at $5,932.7 then the 50% extension lines up with the swing low. Stronger selling pressure could take it down to the 61.8% extension at $5,679.4 or the 78.6% extension at $5,500. The full extension is located at $5,269.4.

The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. This means that the selloff is more likely to resume than to reverse. Also, the gap between the moving averages is widening to reflect stronger selling momentum.

RSI is heading south so bitcoin could follow suit while bears remain in control. Stochastic is also moving lower to reflect the presence of sellers. However, both oscillators are nearing oversold conditions to indicate exhaustion and a potential return for buyers.

Remarks from Alibaba’s Jack Ma appear to be dampening investor sentiment on bitcoin as he remarked that this cryptocurrency is likely in a bubble. He added that blockchain “must be used to solve data privacy, security and sustainability issues” but that cryptocurrency has been turned to “tools and concepts for making money.”

This seemed enough to weigh on bitcoin, which has already been on weak footing over the past weeks. Security threats and regulatory updates have been reason enough for investors to be quick about booking profits, causing rallies to be short-lived and declines to be larger.

A pickup in dollar demand owing to cooling trade tensions also dragged BTC/USD down as the Trump administration could consult CFIUS first before doling out restrictions on any companies with foreign investments.

Rachel Lee
About author

Rachel completed her degree in Mathematical Finance in 2009 and has since been involved in technical analysis of various markets, such as forex, commodities, and digital currencies.
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