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Bitcoin drops 15%, indicators show potential for decline to $6,500

Bitcoin drops 15%, indicators show potential for decline to $6,500

Disclaimer: This article contains technical analysis, which is a methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. The content presented in this article is the opinion of the author. None of the information you read on CryptoSlate should be taken as investment advice. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own diligence and consult with a financial advisor before making any investment decisions.

In the last three hours, the BTC price dropped 15 percent breaking out to the downside of a technical pattern that predicts a further decline to $6,500. The drop coincides with a Bitcoin hashrate drop of over 30 percent and a ruling on the Bitfinex Tether investigation.

Bitcoin technical analysis

Since June 26, after peaking at nearly $14,000, Bitcoin began consolidating. After making a series of lower highs and nearly identical lows, a descending triangle formed on BTC’s 1-day chart. This is considered a bearish pattern that shows decreasing demand for BTC.

At the moment, Bitcoin is breaking below the lower support of the bearish formation signaling a potential 32 percent drop to $6,500. This target is given by the descending triangle and is determined by measuring the height from the upper to the lower trendline.

Thus far, BTC plummeted 15 percent over the recent hours from the breakout point ($9,500) to reach a low of $8,160.

The Fibonacci retracement indicator measured from the low of $3,130 on Dec. 15, 2018, to the high of $13,870 on June 26, shows different price points that could act as a support for Bitcoin’s downward trend.

Based on this technical index, BTC is testing the 50 percent Fibonacci retracement zone at $8,500. A close below this level indicates a further decline that could take this cryptocurrency to hit the 61.8 or 65 percent Fibonacci retracement area. This is considered by many traders as the “golden” retracement level due to the high probability of a rebound, which is also where the target of the descending triangle sits at.

Despite the bearishness, Bitcoin is on a red nine, which is a buy signal based on the TD sequential indicator. This bullish signal forecasts a one to four candlestick correction to the upside before the continuation of the downtrend. Therefore, if the 50 percent Fibonacci retracement zone is able to hold Bitcoin may bounce to the breakout point of the descending triangle or even the 38.2 percent Fibonacci retracement zone before it continues falling.

Bitcoin US dollar price chart
BTC/USD by TradingView

Overall sentiment

Bitcoin is finally breaking out of a consolidation phase that began nearly three months ago. Due to its longevity, the volatility around this cryptocurrency is extremely high, and it is taking the entire cryptocurrency market with it. As a matter of fact, the top four altcoins took even bigger hits than Bitcoin, with Ethereum, XRP, Bitcoin Cash, and Litecoin down more than 14 percent or more.

Fundamentally, Bitcoin suffered from a sudden 33 percent drop in its hash rate over the last 48-hours, going from over 98 million terahashes per second to under 58 million.

In response to the price drop, Tether has started adding additional USDT into circulation, printing 25 million more tokens in the last hour. Bitfinex and Tether also won a minor appeal in the New York Supreme Court today, meaning it won’t have to turn over documents pertaining to the Bitfinex and Tether investigation until a decision on whether to dismiss the case is reached, reported Forbes.

Based on current market sentiment it seems like BTC is in for a bumpy ride.

Bitcoin | BTC

Updated: Nov 7 at 2:51 am PDT
$8,620.16
-12.22%

Bitcoin, currently ranked #1 by market cap, is down 12.22% over the past 24 hours. BTC has a market cap of $154.78B with a 24 hour volume of $23.65B.

Chart by CryptoCompare

Bitcoin is down 12.22% over the past 24 hours.

Posted In: , Analysis, Price Watch, Technical Analysis

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Ali Martinez
Author

Ali Martinez

Technical Analyst @ CryptoSlate

After Ali began forex trading in 2012 In 2014, he came across Bitcoin’s whitepaper and was so fascinated by the idea of a decentralized, borderless, and censorship-resistant currency that he started buying Bitcoin. By 2015, he started traveling to spread the word about Bitcoin.

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Disclaimer: Our writers' opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.