The crypto market has taken a heavy beating during the weekend, with most of the top ten currencies showing bloody charts. Even the DeFi market has plummeted from $9.50b TVL to $7.3b.
Ethereum, which was poised to strike the $500 resistance level, has sunk below $400. Other altcoins also fell below various support levels.
While many analysts are still guessing on the reason behind such a massive market change, one thing is evident: the US dollar is recuperating, and some dollar investors who have flocked to cryptocurrencies during the US dollar’s weak months may be going back to their turf.
Another possible reason is the massive selling of cryptocurrencies for quick profits of whales. This is reflected by the relative strength index (RSI) of many crypto assets.
Taking all of these things into account, has Bitcoin now stepped into bear territory? Or is a recovery in sight? Let’s see the charts.
At the start of September, Bitcoin has experienced a sheer drop from nearly $12,000 to $10,000. The $1,000 price drop happened from September 3-4. At the time of writing, BTC is changing hands at $10,252.03, according to CoinGecko.
As the chart above shows, the 30-day exponential moving average (EMA) is falling below the 50-day simple moving average (SMA), marking a sharp change in trend. The market may also be expected to consolidate for a couple of days to a week, before another trend will become determined.
But is Bitcoin already in bear territory? Let’s see from a macro perspective.
It may be too soon to say that the bears are now in control of the BTC market. Bitcoin showed a golden cross in mid-May, a couple of days after the third Bitcoin halving occurred. The golden cross is a bullish sign, which means that the asset is expected to enjoy a rally in the coming months — sometimes up to a year.
Moreover, there seems to be a lot of support formed at the $10,000. This is a good sign, especially because BTC has been afloat in $10,000 for a considerable amount of time now. In fact, it was only in 2017 up to early 2018 that the chief cryptocurrency has ever stayed in $10,000.
Bears will have to outperform bulls if they want to break this crucial support level and turn it into resistance. If Bitcoin fails to defend the $10,000 mark, it might go down up to $8,800 in the next days to come.
The RSI is also showing that Bitcoin is close to being overbought, even though it hasn’t come to that yet. Also, other signs are showing that a bounce back to the $11,100 level is possible.
Nevertheless, BTC is showing wide Bollinger Bands, which shows that a lot of possibilities may happen in the coming days. At the moment, consolidation may be happening before the winning trend becomes evident to all.
Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CoinQuora. No information in this article should be interpreted as investment advice. CoinQuora encourages all users to do their own research before investing in cryptocurrencies.