The bitcoin price (BTC) has dropped by more than 25 percent in the past two weeks as the cryptocurrency market struggled to see a relief rally.
When the bitcoin price initially dropped to $7,700 on September 27, it rebounded fairly quickly with strength, surging to $8,400 in merely 48 hours. However, as BTC failed to test important resistance levels near $9,000, the dominant cryptocurrency fell back down below $8,000.
Following the decline in the bitcoin price, technical analysts have said that BTC is likely to test lower support levels in the near term in the $6,300 to $7,300 range.
Short term trend of the bitcoin price is looking weak
Up until last week, when the bitcoin price was still hovering in the low $8,000 region, traders did not dismiss the possibility of BTC reclaiming key resistance levels and claiming the downside movement as a bear trap.
For the bear trap to have materialized, BTC should have moved beyond $10,000, an area that has been considered as a psychological level for bitcoin investors by analysts.
The continuous build-up of sell pressure at lower levels decreased the probability of a proper recovery or even a short term relief rally to the $9,000 to $10,000 range, seemingly leaving bears in control over the near term trend of BTC.
Last week, a cryptocurrency trader and technical analyst recognized as “Hsaka” said that buying into every dip of bitcoin can be costly in the short term as deeper support levels for BTC are found in significantly lower ranges in the likes of mid-$6,000 and $5,000.
As said by cryptocurrency trader Josh Rager, the next strong support for BTC is found in the mid-$6,000 region with lots of interest from buyers to enter the market in that area.
With technical and momentum indicators like the Relative Strength Index (RSI) not demonstrating extreme oversold conditions for BTC, technical analysts generally foresee room for a larger pullback for the cryptocurrency.
While the short term trend of BTC looks gloomy, Rager emphasized that a pullback to lower support levels is unlikely to change the long term trend of the asset.
Rager noted that historically, BTC has seen substantial pullbacks in the range of 60 to 75 percent before initiating strong extended rallies, suggesting that a similar price action could happen in the medium to long term in the upcoming years.
“It means that a 40% to 50% pullback isn’t that big of a deal when Bitcoin has seen 75% pullback in the past that was followed by a 1600% gain to ATH This pullback too shall pass and will hopefully make for great buying opportunities in the coming days/weeks,” he said.
Alternative cryptocurrency market demolished
Some major cryptocurrencies like Ethereum and XRP rebounded as BTC stabilized in the low $8,000 region in the past several days.
From all-time highs, however, the vast majority of alternative cryptocurrencies remain down by more than 88 percent on average, with XRP, Bitcoin Cash, Cardano, and Stellar all down by well over 92 percent from their record highs.
A further pullback for bitcoin, possibly to the mid-$6,000 region, may signal trouble for the alternative cryptocurrency market in the upcoming weeks.
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