Over the past week, Bitcoin has been struggling against the dollar as it falls far below $7,000. However, throughout the course of the week the cryptocurrency giant has found support and price action is currently trying to make a recovery as prices rise by 3.10% over the past 24 hours as Bitcoin trades hands around $6730.
We saw cryptocurrency markets sink significantly last week as the total market capitalisation of all coins fell from $340 billion on the 9th of June to a low of $265 billion experienced on the 13th of June. This was a significant $75 billion market wipe out in a matter of just a few days.
Since the low, market cap has found some support as it continued to trade sideways for the past few days until a small break out was seen recently as the market cap currently sits at $289 billion.
One more interesting thing to note that has occurred during the past week is the recent rise of Bitcoin dominance back above 40%. This is beginning to show that Bitcoin is starting to regain some of the dominance lost as it outpaces growth relative to other altcoins.
The graph below shows us the market capitalisation of the top altcoins by percentage over the past year. We can see that during the 2017/2018 altcoin “boom” Bitcoin dominance fell a significant amount from a high of 64% on December 17th 2017 to a low of 33% on January the 4th 2018.
Let us examine Bitcoins price action over the long term and analyse the market.
Looking at the market over the long term, we can see that Bitcoin was trading within the confines of a descending triangle for a period of 6 months before price broke below.
Price action had started the year by putting a high in at $17,252 before the market experienced a significant correction and fell to a low of $6,000 set in early February. Since then, the market had traded in a period of consolidation as price action traded it’s way through the triangle.
Over the next month, we could see price action making a retest at $8,000 if Bitcoin can remain above $6,200 throughout the next few days of trading. Alternatively, the nearest level of support seen below $6,200 is at the $6,000 price handle. If price action manages to break below $6,000 then June and July will turn into very bloody months for the entire cryptocurrency market.
Bitcoin dipped below the triangle during the market wipe out which started last Sunday on the 10th of June. However, we can see that price action has recently found it’s way back within the confines of the triangle once again. One interesting thing to note is that price action has not yet broken below the descending triangle on the BTC/GBP charts as seen below:
BTC/GBP – LONG TERM – DAILY CHART
Looking at the BTC/GBP above, we can see that Bitcoin has not broken below the long term descending triangle. Instead, price action has found support on the lower boundary of the triangle and has since bounced from this support level.
This should provide some more validation that the potential long term descending triangle described in the US Dollar chart previously, is still in play if BTC/USD can break back above into the triangle.
Let us examine price action for BTC/USD over the more recent term a little closer
BTC/USD – SHORT TERM – DAILY CHARTS
Looking at market action over the more recent months, we can see that the recent bearish action has been an extension of the declines witnessed in the previous month. Since early May, price action has fallen from a high close to $10,000 to a low close to $6,000 recently experienced last week.
We can see that price action has found some form of support at the downside 1.272 Fibonacci extension priced at $6,264. This is a Fibonacci extension taken from the entire bearish leg seen during May from high to low.
Price action has recently broke back into the descending triangle. If price action can close within the triangle today we could consider that this triangle may be back into long term play as validated from the BTC/GBP charts above. In this scenario, if Bitcoin can break above $7,000 then it is free to make an attempt at June’s high placed at $7,779.
Alternatively, if price action does not manage to close within the triangle and this bearish pressure continues, we could see prices take another test at recent support seen around $6,264. If price action continues lower the closes handles of support are located at $6,000 and then $5,847.
Over the past week the technical indicators have largely been favouring the bears, however, recent price action has begun to swing technical indicators towards the bulls. The RSI has spent most of the last week stuck in oversold conditions below 20. RSI has recently made its way closer to the 50 handle, if it can break above the 50 handle this would indicate that bullish momentum is starting to really increase within the market.
Price action has also recently broke above the 7 day EMA (blue line) indicating that price is currently trading above the average price taken over the past 7 days which could indicate to the bulls that the bears have started to lose steam within the market. If the 7 day EMA can eventually cross above the 21 day EMA (purple line) this would send signals to all bulls that a market shift may be occurring.
We have been following the development of this long term descending triangle for over half a year now. Recently analysts were startled as price action dipped below the triangle, worried that the worst case scenario was unfolding for Bitcoin.
However, the triangle is still strongly in play on the BTC/GBP charts indicating that it may still be valid if price action can re-enter the triangle on the BTC/USD market.
We will closely be watching momentum over the next few trading sessions to see if bulls can continue this short term run they have started.