Bitcoin’s bad year could be about to get even worse, according to technical indicators that suggest its downward trend could be far from over. If the flagship cryptocurrency keeps falling, its $6,000 support is set to be tested once again.
According to Bloomberg, bitcoin recently entered a new “negative divergence pattern,” according to a technical indicator called the Directional Movement Index. The index’s ADX, which the report notes determines the strength of the trend, seems to have hit a bottom, and is now seemingly moving up.
This, it adds, could mean the downward trend is gathering momentum to drop BTC’s price even further. Its $6,000 support level, off of which it bounced back numerous times this year, hasn’t been tested since mid-August as the cryptocurrency has been trading in the $6,400 to $6,800 range for weeks now.
Yesterday, as CryptoGlobe covered, the flagship cryptocurrency dropped over 5% in about 30 minutes, falling from about $6,500 to $6,200. It has since seemingly started to recover – it’s up 0.21% in the last 24-hour period, and is trading at $6,270.
Some analysts believe bitcoin’s price dropped significantly this week because of a broader market sell-off that saw US stocks have their worst decline since February. According to Yahoo Finance data, the S&P 500 dropped to its lowest level since July.
Speaking to Bloomberg, the president of crypto-focused fund ProChain capital David Tawil stated:
It’s just mirroring the weakness in U.S. stock futures overnight. If the stock market shows strength today, I’d expect recovery.
The crypto market sell-off came shortly after blockchain analysis software company Chainalysis revealed bitcoin whales – its largest holders – are a “diverse group that may be stabilizing, rather than destabilizing, the market.” Another report, published by Juniper Research, claimed the crypto market was on the “brink of an implosion.”
One bearish development the market has been seeing is related to BTC’s increasing hashrate and miners’ struggles to remain profitable. As reported, this year miners have managed to get $4.7 billion in revenue, but small operations working with retail energy prices have now become unprofitable.
Technical indicators, however, aren’t certainties. Fundstrat analyst Robert Sluymer has recently advised crypto investors to “remain patient” before increasing their exposure to bitcoin, as it’s seemingly best to wait for “evidence of an improvement.”
Bitcoin isn’t the only cryptocurrency that’s recovering. The XRP token, after falling from a $0.6 high in the last two weeks, has seemingly started to recover and is currently up by 3.4% in the last 24-hour period, according to CryptoCompare data. It’s trading at $0.423.
The cryptocurrency of the 0x Protocol, ZRX, is currently up over 16% as it was recently listed on Coinbase Pro. Litecoin is also up 1.6%, and is trading at $52.3.
Other top cryptocurrencies, however, are in the red. Ethereum’s ether, the second-largest by market cap, dropped 1.47% to $197, while bitcoin cash dropped 0.37% to $447. EOS and zcash have dropped 2% and 1.71% respectively, and are trading at $5.23 and $110.