Bitcoin Price Enters Consolidation After Long Overdue Reversal
Bitcoin’s bearish reversal intensified Wednesday in a selloff that was long overdue, based on the technical charts.
BTC/USD Price Levels
The bitcoin price declined sharply in overnight trade to reach a new nine-day low of $7,469.50, according to Bitfinex. The leading cryptocurrency would later recover at $7,600, stemming its 24-hour decline to around 2.5%. The decline pushes bitcoin back nearly $1,000 from its recent high. However, the coin has clocked a 30-day return of 20%.
An analysis of bitcoin’s relative strength index (RSI) shows that the cryptocurrency entered extreme overbought territory July 24, which would partially explain the week-long correction.
Since Friday, bitcoin has dipped below $8,000 on four occasions. An imminent return to that level seems less likely, though higher trade volumes suggest that an upward consolidation is possible. More than $5.1 billion in BTC trades have been placed on digital currency exchanges over the last 24 hours, according to CoinMarketCap.
Not surprisingly, bitcoin’s loss had an over-sized impact on the broader market, with all coins in circulation reaching a value of $268 billion. That’s the lowest in two weeks. The crypto market cap would later recover near $274 billion with trade volumes hovering near $15 billion.
Bithumb Volume Tanks
Bithumb saw its trade volumes plunge by nearly 30% on Wednesday after Shinhan Bank announced it would no longer support the digital currency exchange. Meanwhile, Bithumb’s attempt to renew its contract Nonghyup Bank, another major financial service provider, was turned down after the lender cited consumer and money laundering risks.
“We have decided not to renew the contract because Bithumb still has problems in protecting consumers and information and preventing money laundering,” an official from Nonghyup Bank told Business Korea.
The termination of the contract, and the inability to enter a new one, forced Bithumb to suspend new account creation as part of new regulatory guidelines implemented this year. As such, Bithumb is the only major South Korean exchange without a banking partnership. Coinone, Upbit and Korbit have all renewed their contracts with major financial institutions.
Bithumb fell victim in June to an elaborate hack that resulted in the loss of $30 million in cryptocurrency. The attack compelled lawmakers to fast-track new regulations that would recognize digital currency exchanges as financial institutions.
On an adjusted basis, Bithumb processed $250.7 million worth of cryptocurrency transactions on Wednesday, according to CoinMarketCap. Upbit saw its volumes fall 26% to $233.1 million.
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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