By CCN.com: Dominant crypto asset bitcoin sent fresh shivers through the rest of the cryptocurrency market with its latest plunge.
The bitcoin-to-dollar exchange rate dropped as much as 2.66-percent on Monday to establish an intraday low towards $5,569.71. The move brought bitcoin’s total downside correction from its weekly high to 4.58-percent, wiping more than $3.5 billion on the way.
Other assets listed in the cryptocurrency index followed bitcoin’s sentiment. Ethereum, the second-largest crypto by market capitalization, lost a little over a billion dollar as its dollar-rate dropped 6.76 percent. Bitcoin Cash, bitcoin’s forked version and the fourth-largest crypto, too plunged by more than 11-percent. EOS, Litecoin, XRP, Binance Coin and the rest of the top assets also trended in negative territories, as shown in the CoinMarketCap listing below.
Combined, bitcoin and the rest of the cryptocurrency market, which includes more than 2,100 assets, lost up to $8.7 billion from their weekly high.
As predicted in one of our analysis, the bitcoin price is facing a psychological resistance in $5,660-5,787 area, which served as an active support area in June 2018. The latest price action further reveals the presence of an ascending parallel channel. Its upper line lately coincided with the $5,787 resistance level. The said line also served as a crucial resistance on two separate occasions, as indicated by ‘1’ and ‘2’ in the chart above. That, at least, confirmed the role these indicators are playing in the current market scenario.
Moving forward, the bitcoin price could continue its corrective action to find decent support towards the green bar ($5,303-5,408) as shown in the chart above. The bar coincides with the lower trendline of the ascending parallel channel, which could prompt traders to enter the market at a lower rate, intraday-wise. As a result, the market could look at a small bounce back – again – towards the $5,660-5,787 area.
A break below the green bar, accompanied by a rise in volume, would have the bitcoin market test the 50-period moving average as the next downside target. Historically, the MA has served as a yardstick to define the market’s bear or bull bias. So, breaking further below it will not bring any good news for bitcoin. At the same time, a bounce back from the MA would keep the bullish bias intact for the medium-term.
To the upside, a break above the $5,660-5,787 area could put bitcoin on an easy run towards $6,000.
The rest of the cryptocurrency market is likely to tail bitcoin’s price moves, in the meantime.