Bitcoin ’s price May 17 dropped to a six-month low on Friday, with a widely tracked technical indicator reporting the strongest bearish bias in eight months.
The number one cryptocurrency by market value fell to $7,009 on Bitstamp at 10:05 UTC – the lowest level since May 17 – erasing the entire rally from $7,293 to $10,350 in October, plus some.
At press time, BTC has bounced back slightly and is trading at $7,220, down 8 percent on a 24-hour basis.
The downtrend looks sustainable, as the weekly relative strength index (RSI) – an indicator used to confirm market trends and overbought and oversold conditions – has declined to 43.00, the lowest reading since mid-March. A reading below 50 indicates bearish conditions. So, it seems safe to say the market sentiment is extremely bearish.
- Bitcoin’s price has briefly dropped to $7,000 – its lowest level since May.
- Next losses may extend to falling channel support at $6,800, with a weekly chart indicator reporting the strongest bearish bias since March.
- Intraday charts are reporting oversold conditions. As a result, consolidation or a minor bounce to $7,500 could be seen before a deeper drop.
- A break above $8,231 is needed to invalidate lower highs setup and confirm a short-term bullish reversal. The outlook as per the weekly chart would turn bullish once the RSI has moved above 53.00.
According to the highly-cited Bitcoin stock-to-flow model, the crypto asset should be on pace to reach as much as $55,000 per BTC when the asset reaches its halving this coming May. While Bitcoin price may be known to surprise people and go on unstoppable parabolic rallies, rising from $6,000 to $55,000 in less than one year seems unrealistic at best.
In fact, the recent price action doesn’t match with historic Bitcoin market cycle behaviors at all. Miners are capitulating – an occurrence that typically happens after each pre-defined halving as a result of having the block reward miners receive slashed by 50%, while operating costs only increase.
Another potential reason for the failed rally was due to market participants being so overly bullish on Bitcoin fundamentally, that it drove the price of the asset up too quickly, resulting in an echo-bubble or fractal of the 2017 crypto hype bubble.
However, because the rally failed to break to a new all-time high, it also failed to capture the attention of the mainstream public once again. With no new money coming into the crypto market, and with plenty of money having left after being burned by the resulting bubble pop, Bitcoin has found itself once again looking for a bottom.
Bitcoin Price May 17
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