Bitcoin fully retraces daily pump as bulls defend key support level
Bitcoin has had a crazy day, with the bloody battle between bulls and bears leading to a chair-shaped pattern, with BTC surging from its key price inside the lower-$7,000 to highs of $7,800 before absolutely retracing back to its support levels.
This volatility has confirmed that Bitcoin remains firmly caught during a downtrend, as analysts are noting that momentary rallies just like the one seen these days are ideal short entries that are usually followed by more drawbacks.
Fleeting rally leads Bitcoin right back to where it started
At the time of writing, Bitcoin is trading down marginally at its current value of $7,250, which marks a notable drop from its daily highs of $7,800 that was set at the height of this morning’s rally.
The inability of bulls to sustain this momentum is an unbelievably bearish sign for Bitcoin because it points to the chance that the cryptocurrency’s consumers are weak at the instant, which can spell bother for the support it has fashioned within the lower-$7,000 regions.
Cantering Clark, a distinguished cryptocurrency analyst on Twitter, explained in an exceedingly tweet that rallies just like the one seen this morning are best classified as standard deviations that don't represent any style of a trend shift.
He explained while referencing a previous short position he had been in:
“In bearish trends – Moves that are standard deviations above the norm and into resistance are for selling. You don’t hold them, and you certainly don’t buy them. Shame I didn’t hang on for my original entry, which didn’t end up being sub-optimal after all.”
Analyst: break below current support likely to spark significantly further downside
As for wherever Bitcoin goes next once this recent bout of volatility, analysts are noting that it's imperative that it stays higher than its Monday lows, which seems to be holding as support within the near-term.
TraderX0, another standard cryptocurrency analyst on Twitter, noted during a recent tweet that he's trying to feature to his current short position if Bitcoin breaks below roughly $7,150. He said while referencing the chart seen below:
“BTC: Break Monday's lows – and I’ll be adding to my shorts…targeting previous weekly open. Took 25% profits below Mondays open and -re-added some shorts at 72s. Avg entry now 7530.”
The next few hours may offer significant insight into just how far the current downtrend will extend, as a break below Bitcoin’s current support level could mean significantly further losses are imminent.
Bitcoin, currently ranked #1 by market cap, is up 0.61% over the past 24 hours. BTC has a market cap of $131.33B with a 24-hour volume of $21.01B.