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Bitcoin is currently facing the strongest selling pressure since February with commentators and analysts thinking that there is a possibility that it might drop below the recent lows near $7,750.
Bitcoin is currently facing the strongest selling pressure since February. Commentators and analysts think that there is a possibility that it might drop below the recent lows near $7,750. On October 16, BTC price fell below $8,000 in fresh choppy trading after several days of consolidation and slow grind.
The top cryptocurrency by market value dropped from $8,326 to $8,086 in an hour to 17:00 UTC on October 15. That confirmed a downside move in the recent trading range of $8,450–$8,250 as anticipated. Since that time, the price of the major crypto has stabilized between $8,000 and $8,100.
Some of the commentators think that BTC may easily go closer to the $7,750 zone. They also add that the drop from the levels above $8,300 could be a bear trap. That thought is valid if the seller exhaustion that appeared on the bullish divergence of the 14-day RSI that was confirmed last week is put into consideration.
Up to now, all that data and signals from the market have failed to excite the investors. The longer duration indicators still report bearish conditions. For example, the weekly Chaikin Money Flow (CMF) index has already printed the value of -0.14 – the lowest since mid-February. CMF incorporates both prices and trading volumes to determine the buying and selling pressure in the market at any given time.
Any value below zero shows that selling pressure is higher than buying pressure or inflow. This indicator confirmed that the current bitcoin market is now at its most bearish since February. The path of least resistance for BTC is to the lower side. At the moment of writing, Bitcoin is trading at around $8111.
The Midweek Dump
Data obtained from Coin360 showed that Bitcoin put an end to its choppy trading style on October 16. It dumped almost $300 within minutes. At first, the markets had rejected a steep plunge with some of the exchanges showing a Bitcoin reverse action at $8,000. Those levels came under intense pressure and gave way to lower prices.
But, the largest crypto has since recovered back above $8,000 and it is currently hovering around $8,100. Commentators and analysts were unmoved by the test of support having forecasted its arrival in the past two days before the fall. Some have even stated that the more significant lower boundary for BTC lies near $7,400.
The current activity could be dictated by the buyers who are trying to benefit by absorbing the downward movements. That will eventually increase sentiments to drive prices lower. The current data from all timeframes for Bitcoin trading still appear negative. Popular Twitter trader Crypto Rand said that ‘Bitcoin looking pretty ugly here,’ adding:
“Not taking positions for now. But I would be looking to add shorts on the flag retest after the potential breakdown. Always plan early enough to avoid emotional decisions.”
Risk-off May Overload BTC
The bearish trend is accompanied by price-negative movements on the macro front. In 2019, the global economic growth is expected to drop to 3% which is the lowest since the 2008 financial crisis and down from 3.8% recorded in 2017.
Moreover, China-US trade wars and political tensions are escalating. The latest reports show that the US House of Representatives on October 15 passed bipartisan legislation supporting human rights in Hong Kong. China considers this as an intervention in the internal matters and has warned of retaliation if the U.S. does not stop pushing forward Hong Kong-related bills.
Due to these factors, the risk assets are flashing red across the board. Stocks in the UK, France, and Germany have so far recorded modest losses with the Shanghai Composite index losing 0.44% while the S&P 500 shed 0.36% on October 15. On the other hand, the haven assets like gold and the Japanese Yen are better bids.
The risk aversion may not go well with Bitcoin since it is still considered to be a risky asset. Moreover, the cryptocurrency does not have a credible story as a haven asset.