When the bitcoin price initially fell to around $10,300, technical analysts warned that the breach of the short term trend line of the dominant cryptocurrency is likely to take the asset to sub-$10,000, which has been considered a key psychological level by many investors throughout the past eight months.
Prominent crypto trader Josh Rager, prior to the steep pullback below $10,000, stated:
“Bitcoin possibly just made it’s next lower high after rejecting of 20MA on daily and short term trend line breakdown. Currently bouncing off long term trend line and wanting to watch a close above $10,200,”
In the last four failed attempts to test strong resistance levels in the last three weeks, the bitcoin price dropped to mid-$9,000.
Although bitcoin has shown some signs of oversold conditions, Scott Melker, a cryptocurrency trader at Texas West Capital, stated that the oversold signals are likely to be only enough for mild relief bounces, not an immediate trend reversal to the upside.
“You can only live on the edge for so long before life catches up to you. The ascending wedge that everyone was watching broke down. Oversold bull divs (not shown) printing on hourly, most likely just enough for some mild relief bounces for the moment,” he said.
DonAlt, a cryptocurrency trader, said earlier this week that if bitcoin fails to hold strong support at $10,400, it is likely to test $8,000 next as the next big support level.
“Rejected by resistance, bought up in support. If 10800 gives way I think we see 11700 again. If current support at 10400 does, I expect 8000. Looks weak but looks too good to short. Once this trading range resolves one way or the other the chop will end,” the trader said.
Since early August, bitcoin has shown the tendency to bounce above $10,000 with strength and as such, it remains unclear whether there exists enough sell pressure in the market to bring bitcoin below $9,000 for the first time since July 17.
According to the data provided by Messari, the “Real 10” volume, which measures the verifiable global volume of bitcoin, is hovering at $1 billion. In comparison, earlier this week, the Real 10 volume was struggling to break past $600 million.
At the start of the third quarter of 2019, the global economy has seen increasing geopolitical risks and rising tension between leading economies affect the international equities market.
Instability led investors to seek for safe havens and alternative stores of value like government bonds and gold. Yet, bitcoin has struggled to demonstrate signs of a safe haven in recent months.
Willy Woo, a cryptocurrency analyst, said that in the long term, as BTC grows in market cap, it has the potential to evolve into a safe haven.
“As BTC grows in market cap (attracting more mainstream or macro investors looking for exposure, instead of early adopters), we can see its correlation with GLD is increasing (grey) and its correlation to USD strength is decreasing (blue),” he stated.
Click here for a real-time bitcoin price chart.