Bitcoin prices are feeling the pull of gravity today, amid solid gains across many alternative cryptocurrencies.
Having soared to new record highs around $20,000 over the weekend, the world’s largest cryptocurrency by market capitalization has since dropped to sub-$18,000 levels.
Bitcoin (BTC) has depreciated by 5.3 percent in today’s session, and was last seen changing hands at $17,4500 levels, as per CoinDesks’s Bitcoin Price Index (BPI).
Meanwhile, ether (ETH) and bitcoin cash (BCH) have both hit new all-time highs today (as per CoinMarketCap), having gained 16.6 percent and 26.6 percent, respectively, in the last 24 hours.
With the cryptocurrency market as a whole now worth over $630 billion, the top 10 cryptocurrencies by market capitalization are up at least 6 percent on the day.
A detailed look at the individual markets suggests that the money could be flowing out of bitcoin and into rival cryptocurrencies. For instance, the strong rally in bitcoin cash is backed by a surge in volumes on exchanges offering BCH/BTC pairs.
This rotation of money out of bitcoin and into alternative currencies is largely in line with the bullish cross cryptocurrency charts (BCH/BTC, XRP/BTC, LTC/BTC) discussed last Friday.
That said, the downside in BTC could be limited, as most major alternative currencies have clocked new lifetime highs in the last 24 hours, and it’s possible that investors may take their profits in alternative currencies and channel part of that new money back into bitcoin.
Even so, the price chart analysis calls for a quick progression in prices, or bulls risk losing control.
The above chart (prices as per Coinbase) shows:
- “Hanging man” candle – a bearish reversal candlestick chart pattern that occurs at the top of an uptrend. A weak close (as per UTC) below $18,200 (yesterday’s low) would confirm a bearish reversal.
- Increased risk of a bearish price-relative strength index (RSI) divergence, as suggested by higher highs in price and lower highs on the RSI. A weak close today would confirm the bearish RSI divergence.
- The 5-day MA and 10-day MA are curled up in favor of the bulls.
- Rising trendline support is seen at $17,500.
BTC looks set to test the rising trendline support of $17,500 in the next 12 hours. However, the support might hold, since the dips below the upward sloping 10-day MA ($17,756) are likely to be short-lived. Furthermore, a pullback in alternative currencies could take the pressure off bitcoin.
However, a close (as per UTC) below $17,500 would add confirm the bearish hanging-man reversal and bearish RSI divergence. As history shows, bitcoin has suffered major corrections following confirmation of the bearish RSI divergence.
Hence, a close below $17,500 could potentially yield a decline to $13,500 (Dec. 12 low).
On the other hand, a move above the 5-day MA ($18,822) in the next few hours could put a return to $20,000 back on the table.
Horse race image via Shutterstock
The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at email@example.com.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
Source: Coin Desk