By CCN Markets: The bitcoin price crumbled overnight, breaching the psychological barrier of $10k and dropping as low as $9,334 on Coinbase. The fall marked a nine percent collapse in a matter of hours, wiping out a total of $14 billion in BTC market capitalization.
The collapse is primarily a technical move coupled with low trading interest on the CME bitcoin futures platform. On the long-term, however, bitcoin is building a strong, consolidated base, setting up for a move higher.
If the bitcoin price maintains its downward trajectory, it will end the week with a third-straight loss. As trader Josh Rager explains, this isn’t necessarily unusual, even in a bull market.
“Last uptrend Bitcoin has multiple months with at least 3 down weeks in a row.”
The key figure to watch is $9,533. If BTC ends below this number on Sunday it would mark a lower low, giving the bears short-term control of the market. Below that, BTC could fall to support lines around $8,000.
Open interest and volume from institutions has steadily declined through August. A bullish explanation is that institutions are holding off for the launch of rival Bakkt in September. The bearish argument is that Wall Street has lost interest as risk-off conditions prevail across the markets.
Despite the overnight slump, bitcoin still looks good long-term. Per a CoinMetrics report this week, bitcoin’s ‘realized cap’ is at record highs. Realized cap measures each bitcoin at the price it last moved, rather than than pricing every BTC at the current price.
What does this mean in reality?
“This signifies that capitulation is most likely almost complete, since a majority of coins that were bought above $13,000 have now been sold. A relatively large amount of BTC ownership is now concentrated in the $3,000 to $12,000 range, which is setting up for a healthier base.”