Bitcoin Swings Back Below $11,000 as Bearish Reversal Trend Emerges
Bitcoin’s price extended to the downside on Monday, losing the $11,000 handle and bracing for a steeper fall in the short term. Although the long-term trend remains positive, a classic technical formation suggests that a major pullback may be afoot.
The bitcoin price was back on the defensive Sunday, falling to a low of $10,461 on Bitstamp. The BTC/USD exchange rate was last seen trading 1.6% lower at $10,580.
In the last 24 hours, bitcoin’s price is down more than 6%.
Losses in back-to-back sessions has knocked bitcoin off overbought levels, according to the daily relative strength index (RSI). The RSI peaked above 80 last week. It was last seen hovering in the mid-50 range.
Bitcoin’s market capitalization currently stands at $189.6 billion, according to CoinMarketCap. During the height of the rally last week, bitcoin’s market cap was worth roughly $245 billion.
The total cryptocurrency market cap is currently valued at $309.5 billion. Bitcoin accounts for 61.2% of the overall market, down from recent highs of more than 63%.
Technical Correction Could Be Punishing
After months of accumulation, bitcoin’s price could be bracing for a major pullback in the short term, according to cryptocurrency analyst Josh Rager. In a Sunday Twitter post, Rager identified a shooting star pattern on the weekly chart, which typically foretells a bearish trend reversal.
$BTC Monthly close looks good
Weekly close looks ugly, you'll likely see this shooting star type of doji all over CT
Which typically is a signal for reversal & we could see a couple of down weeks for Bitcoin
But be happy as that would mean prime buying opportunities ahead pic.twitter.com/szZLVShLKD
— Josh Rager 📈 (@Josh_Rager) July 1, 2019
In Rager’s view, “we could see a couple of down weeks for bitcoin” as a result of the technical setup. Rager remains bullish on bitcoin overall and says the long-term outlook (i.e., monthly timeframe) still looks good.
Bitcoin’s correction follows an explosive rally that saw the the largest cryptocurrency gain 50% in less than a week. The BTC price eventually peaked around $13,800 in the last week of June, its highest in 17 months.
Despite the pullback, bitcoin has more than tripled from its December low and is currently riding a five-month winning streak. The extent of the rally has caught most market observers by surprise. What’s more, the lack of a major correction has raised alarm bells about the sustainability of the price trend.
Bitcoin’s bull cycles usually experience several major reversals of 30% or more. At current values, the largest cryptocurrency is down more than 20% from its most recent peak.
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 TradingView.