Crypto bears are back in control during Asian trade, with Bitcoin continuing its slide after falling below $US8,000 overnight.
A short time ago, prices for Bitcoin had steadied just above $US7,500 after a sharp slide this morning. At current prices, it marks a fall of around 12% from last week’s highs:
While some attributed Bitcoin’s July rally to external factors such as institutional investor interest and talk of a Bitcoin exchange traded fund (ETF), the overnight selloff appears to be largely technical in nature.
IG Markets senior strategest Ilya Spivak told Business Insider that current trader positioning for Bitcoin is indicative of a bearish setup.
“The latest numbers show that close to 78% of IG retail traders are net-long bitcoin, with the ratio of traders long to short at about 3.5 to 1,” Spivak.
“We typically take a contrarian view of crowd sentiment, and the fact that traders are net-long suggests Bitcoin may be heading lower.”
Spivak added that a bearish bias for Bitcoin is also reflected in the technical patterns.
“What briefly looked like it may be an upside breakout fizzled as BTC/USD fell back into a Triangle consolidation pattern carved out since February,” Spivak said.
“Critical support remains in the $US5790-$US6450 area, with a break below that opening the door for a test below the $US5,000 figure.”
“A break above resistance at $US8,488 is needed to negate immediate downside pressure. If that happens, a revisit of the $US10,000 figure might follow.”
Based on data from coinmarketcap.com, Bitcoin trading activity has accounted for around 35% of total volumes across all crypto exchanges over the last 24 hours.
Trading volumes for Tether, a cryptocurrency pegged to the US dollar, made up around 21% of total volumes with activity in Ethereum, EOS and Bitcoin Cash rounding out the top five.
Downward pressure on Bitcoin has also sparked a selloff in other major cryptos, as some volatility returns to the market following months of range-bound trading in the first half of this year.