Bitcoin Price Dips Below $7,000 but Key Support Still Intact
Bitcoin’s price swung lower on Thursday, dragging other cryptocurrencies along with it after short-term overbought conditions limited the corrective rally. The continued defense of a key support level is needed to sustain the bullish outlook.
The bitcoin price is currently trading at $6,917 on Bitfinex, a decline of 1.7% from the previous session. The leading digital currency touched a low of $6,883. BTC notched a three-week high of $7,139.40 on Wednesday before running into overbought resistance. As Hacked reported at the time, a slight pullback is to be expected.
Despite the latest drop, bitcoin retains its bullish bias with prices holding firmly above the 200-day moving average, which is currently situated around $6,840 on the 4-hour chart. The Relative Strength Index has taken a sharp fall but continues to hold above 50.
Trading volumes in BTC amounted to $4.3 billion on Thursday, roughly in line with the previous session. At current prices, BTC is capitalized at $119.6 billion for a 53.5% share of the overall market.
Bitcoin’s pullback precipitated bigger declines in the broader market. Since peaking above $233 billion on Wednesday, the total cryptocurrency market capitalization has fallen back toward $223 billion. Ethereum, XRP, bitcoin cash were all trading at a loss of at least 4.8%, according to CoinMarketCap.
The Worst Is Over
Although bitcoin’s short-term trajectory remains unclear, the general view appears to be that the worst has already passed. This doesn’t mean bitcoin can’t decline in the near term or even reach new lows for the year; it simply means that the rate of the price collapse has slowed considerably.
This view was recently shared by Erik Voorhees, CEO of cryptocurrency exchange ShapeShift. In an interview with CNBC, Voorhees said he believes “we’re done with the majority of the collapse.”
Since 2012, bitcoin has faced six bear markets – all of which resulted in the loss of 36%. The worst collapse occurred between Nov. 30, 2013 and Feb. 21, 2017 when prices fell as much as 83% from their peak. This was also the longest bear market bitcoin has faced.
An analysis of bitcoin’s last six bear markets suggests that it could take years for a new high to materialize. The last parabolic increase in the bitcoin price, culminating in the December high, took nearly 1,500 days to complete. Previous parabolic price increases took anywhere from 300 days to 900 days.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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