Bitcoin Price Suffers Blow as Market Cap Falls $10 Billion
Bitcoin’s price was back on the defensive Wednesday, as the long unwind from $12,000 continued following another failure to overcome that level last week. Over the past 24 hours, bitcoin’s market capitalization has fallen by more than $10 billion.
The bitcoin price pulled back sharply late Tuesday and continued lower in the early part of Wednesday’s session. Bitcoin bottomed at $10,349.00 on Bitstamp, its lowest in almost two weeks. At the time of writing, BTC/USD was down 2.5% at $10,598.
With the slide, bitcoin entered extremely oversold conditions on the hourly relative strength index (RSI). The closely-watched momentum indicator briefly fell below 20 on a scale where anything below 30 indicates oversold conditions.
The price breakdown was accompanied by a sharp uptick in trading volumes. Verified exchanges processed nearly $1.5 billion worth of bitcoin trades over the past 24 hours, according to Bitwise. Binance was the largest spot market for bitcoin trades, followed by Coinbase and Kraken.
At current values, bitcoin has a total market capitalization of $189.7 billion. Its share of the overall market continues to hold near 68%.
Technical Trading Dictates Bitcoin’s Fate
Bitcoin’s swift correction intensified after the price fell below a key support level on Tuesday. Before the dump, bitcoin was in consolidation mode after the bulls failed to pierce through $12,000. With the latest breakdown, bitcoin is mired in a string of lower highs stretching all the way back to the June peak.
Over the past three weeks, bitcoin has carved out a narrower trading range, a sign that volatility was declining. In fact, bitcoin’s 30-day volatility index has plunged to its lowest level since late June.
At the current rate, bitcoin risks a harder fall, possibly below $10,000. A look at the daily chart shows long-term support in the mid-$9,000 range, which corresponds with the 100-day exponential moving average (EMA). Beyond that level, bitcoin is likely to see support around $9,070, which represents the swing low from last month.
On a fundamental note, the U.S.-China trade war got some reprieve Tuesday after the Trump administration announced it would delay tariffs on several categories of Chinese goods. The news sent stock markets soaring, with the Dow closing up nearly 400 points. The Dow has since given back all of those gains due to bond-market volatility.
Bitcoin is increasingly being viewed as a haven against economic and political instability. For that reason, it has moved in lockstep with gold over the past three months.
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.
Featured image courtesy of Shutterstock. Chart via TraingView.