Some major cryptocurrencies and tokens have fallen by 5 to 15 percent in the past 24 hours as the Bitcoin price failed to remain above the $7,000 mark.
Within 12 hours, the price of Bitcoin fell from $7,100 to $6,900, briefly falling below the $6,900 mark. While Bitcoin has stabilized in the low $6,900 region, many traders believe that the next major support level is at $6,500, given the downtrend of the dominant cryptocurrency and the two consecutive buy candles it recorded this week as shown below in its 1-day price chart.
Lil Uzi Vertcoin, a respected cryptocurrency trader and technical analyst, said:
“BTC topped the bollinger bands and rejected the ichimoku cloud resistance here, $7,130 is the resistance to break but it looks more difficult now, expecting $6,700 to $6,500 to be good support. I’ll probably long if we test $6,500-$6,600 again.”
Since August 6, Bitcoin has remained in the mid-$6,000 region, struggling to break out of the $7,000 resistance level and demonstrate strong volume to signal proper mid-term recovery.
Throughout this week, CCN.com emphasized that the weak trading volume of Bitcoin and other major cryptocurrencies like Ethereum could have a negative impact on the short-term trend of the crypto market.
On August 30, the daily trading volume of Bitcoin and Ether, the native cryptocurrency of Ethereum, has fallen to $4 billion and $1.4 billion respectively. In previous rallies wherein Bitcoin tested a major resistance level at $9,000 and $10,000, the volume of Bitcoin easily surpassed $5 billion, moving closer to $6 billion.
In contrast, the volume of US dollar-backed stablecoin Tether (USDT) has continuously remained at $3 billion, more than two-fold of the volume of Ether, suggesting that a large number of traders are relying on USDT to hedge the value of cryptocurrencies to that of the US dollar.
Many investors have publicly stated that they have pulled out of high-risk and high-return trades like tokens and small market cap cryptocurrencies due to the uncertainty in the price of Bitcoin. If BTC falls back to the mid-$6,000 region, regardless of today’s poor performance, tokens will bleed out throughout the upcoming days.
In periods of instability and uncertainty, especially with Bitcoin, it is extremely risk to invest in tokens as the value of small market cap cryptocurrencies tend to increase or decrease by 10 to 30 percent per day depending on the short-term trend of BTC.
Experts said that the worst part of the bear market is over, as the market will not likely see 40 to 60 percent drops in the near future. But, with Bitcoin below $10,000, the crypto market is undoubtedly in a bear market and a clear downward trend.
When the crypto market initiates a proper mid-term recovery after showing stability in the $7,000 to $9,000 region, then it can be said that the bear market is over.
Featured image from Shutterstock. Charts from TradingView.
Last modified: June 10, 2020 3:38 PM UTC