- A deterioration in short-term momentum for bitcoin led to a 13% sell-off previously week.
- But bitcoin managed to successfully take a look at a key technical support level near $39,900 on Tuesday.
- Cryptocurrencies nonetheless stay in risk-off mode as bitcoin continues to outperform ether on a relative foundation.
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A sell-off in bitcoin on Tuesday examined a key technical support level for the cryptocurrency, but there might nonetheless be extra draw back forward based mostly off of deteriorating momentum indicators.
Bitcoin has dropped 13% over the previous week, with a lot of the decline coinciding with the $300 billion Evergrande debt disaster in China. But bitcoin managed to bounce increased off the $39,900 level late Tuesday evening, a key horizontal support level monitored by technical analyst Katie Stockton of Fairlead Strategies.
Despite successfully testing support on Tuesday, bitcoin is not out of the woods but in keeping with Stockton. Bitcoin’s RSI indicator, which helps establish oversold and overbought ranges, remains in a downtrend but has not but hit oversold ranges. Meanwhile, a continued decline within the MACD (shifting common convergence divergence) indicator, which measures momentum, is accelerating.
For now, the bias within the short-term is bearish for bitcoin, and a weekly “promote” sign within the MACD indicator can be sufficient to show the intermediate-term bias for bitcoin to bearish from bullish, Stockton highlighted in a observe on Monday.
But Stockton nonetheless sees long-term upside forward for the cryptocurrency as “the long-term uptrend nonetheless has a maintain on bitcoin.” Stockton mentioned that after the present pullback matures, the latest peak near $53,000 will function a “minor hurdle to all-time-highs” near $65,000, representing potential upside of 54% from present ranges.
Bitcoin is not the one cryptocurrency experiencing a present interval of weak spot. Ether can also be down sharply from its latest highs, and the relative outperformance of bitcoin over ether previously week means that the cryptocurrency house remains in risk-off mode, in keeping with Stockton.