Bitcoin Price Rewinds to $7,800 as Cryptocurrency Market Drops $27 Billion Overnight

On yesterday’s report, CCN emphasized that if the bitcoin price falls below the $8,200 resistance level once again, a reentry into the $7,000 region is inevitable. Over the past 24 hours, the bitcoin price dropped by around 4 percent from $8,300 to $7,850.

Bitcoin Price Trend

As CCN previously reported, the recent correction of the cryptocurrency market can be attributed to three major factors: Mt. Gox sell-off in early May, Bitfinex taxation policy, and scandal involving South Korea’s two largest cryptocurrency exchanges UPbit and Bithumb.

These three factors led investors to lose confidence and trust in the cryptocurrency market in the short-term. By targeting a small portion of their user base to forfeit tax IDs and personal identification, Bitfinex led large-scale investors to become fearful of a potential government intervention and withdrew big sums of funds from the exchange.

In South Korea, due to the controversy surrounding UPbit and Bithumb, local investors have become bewildered, not knowing whether the local cryptocurrency market can be trusted or not.

Despite the drastic improvement in the infrastructure of the cryptocurrency industry and the entrance of major financial institutions, the overly strong downtrend of BTC and other major cryptocurrencies have disallowed the market to rebound and initiate a corrective rally.

It is likely that in the short-term, the BTC price drops to the lower end of $7,000, as cryptocurrency researcher Willy Woo suggested on May 22.

“Pretty sure $8,000 support on BTCUSD is gonna fail. Next support, low $7,000s (though that could fail too). Then I’m expecting another dead kitten taking us into July - September period when BTC unwinds completely from mania phase and is ready for an accumulation phase,” said Woo.

The Relative Strength Index (RSI) of bitcoin has already started to show oversold conditions, which would normally result in a strong rebound for BTC. But, due to the strong downtrend of the bitcoin price, the low RSI of bitcoin will likely be dismissed and bears will continue to push the price to the lower end of $7,000.

Bitcoin has successfully minimized its downtrend at the $7,700 mark, recording a slight bounce back to $7,850. However, if the bitcoin price declines below $7,700, it is likely that the bitcoin price stabilizes in the $7,300 region in the short-term.

Tokens

In the cryptocurrency market, trading tokens is similar to leverage trading, because tokens often increase or decline in value by larger margins in comparison to other major cryptocurrencies.

Ontology, Aelf, ICON, 0x, Decentraland, Ziliqa, and AirSwap, all of which have recorded over 20 percent gains against bitcoin over the past week, have recorded losses in the range of 4 to 12 percent against bitcoin and 8 to 16 percent against the US dollar.

If the BTC price fails to rebound to the $8,000 region and remains in the lower end of $7,000 throughout this week, it is highly likely that tokens will continue to drop against both bitcoin and US dollar.

Featured image from Shutterstock.

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About the author

Joseph Young
Joseph Young

Hong Kong-Based Finance and Cryptocurrency Analyst. Contributing regularly to CCN and Hacked. Providing unique insights into the crypto and fintech space since 2012.

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