Bitcoin
This Newly Formed Structure Could Cause Bitcoin to See Major Losses
Cole Petersen | Aug 04, 2020 | 23:00
- Bitcoin and the aggregated cryptocurrency market are currently in a precarious position following the series of strong rejections seen yesterday evening
- The selling pressure incurred as a result of these rejections has not yet been enough to force BTC or other assets below their crucial support levels
- That being said, analysts are growing increasingly cautious on BTC’s near-term outlook
- One trader explained that a recently emerged technical pattern seems to indicate downside is imminent
- It is important to note that there is one fundamental development that could invalidate this pattern
Bitcoin rallied up to highs of $11,500 overnight before facing an influx of selling pressure that slowed its ascent.
The cryptocurrency is now trading just above its crucial support at $11,000.
Although buyers have been in firm control of Bitcoin throughout the past few weeks, ever since it posted a rejection at $12,000, its momentum has been slowing.
This may indicate that it needs to undergo another consolidation phase before it can push higher.
One pattern resulting from this recent price action is quite bearish, suggesting that the benchmark crypto could be poised to see notable downside.
Bitcoin Struggles to Maintain Momentum as Selling Pressure Grows
At the time of writing, Bitcoin is trading down just over 1% at its current price of $11,100.
Buyers tried to spark a fresh leg higher yesterday, but only led BTC as high as $11,500 before it lost its strength and reeled lower.
This is the second firm rejection seen in the past several days – the first being BTC’s massive selloff seen when it tapped $12,000 on Saturday evening.
Analysts are now noting that the cryptocurrency could be well-positioned to see further near-term downside.
While speaking about this possibility, one trader said that the selloff recently seen at $12,000 is not “momentum to disregard.”
“I expected a stronger Monday session for BTC to be bullish, disappointing, it even dumped late Western session hours before the close. We dumped over 1’500$ [on] Sunday after tapping 12.2k, it’s not momentum to disregard, could very well be rolling in our faces.”
Image Courtesy of SalsaTekila. Chart via TradingView.
Here’s What Could Work to Invalidate This Weakness
Bitcoin is in a precarious position now, but the tides may quickly shift back into buyers’ favor in the coming days.
The same trader later noted that one development that could invalidate the sentiment he shared is a $120 million Tether mint that just took place.
He even went so far as to note that this fresh stablecoin supply could help propel BTC significantly higher.
“Closed my BTC short on 11,110$: woke up to a 120MM$ tether mint, which changes my [perspective] altogether: new highs much more likely just because of it IMO. Side lined for now.”
How Bitcoin trends throughout the coming couple of hours as its daily close approaches may provide investors with greater insight into its near-term trend.
Featured image from Unsplash. Charts from TradingView.
