Trading in bitcoin has been choppy this week, with one of the largest daily price losses of the year taking hold this Tuesday.
Prices in the world’s leading cryptocurrency market came under pressure with investors looking to consolidate around recent gains. This drove prices down from around $10,848 to around $9,412.
The bitcoin correction comes after a sustained period of growth for bitcoin. A shift in technical charts from the bullish to bearish confirms the trend.
The decline has in part been fuelled by news around the regulation of Facebook’s Libra project, seen as a flagship development for the growth of the cryptocurrency sectors.
Regulators, including in the US, have sounded harsh notes about the project this week. Some analysts have subsequently said the news is beginning to weigh negatively on market sentiment.
It also follows comments from President Trump, who was critical of bitcoin this week. Trump also called for banking regulations to apply to cryptocurrencies and stablecoins like Facebook’s Libra.
The news will be a blow for bitcoin bulls, who will be hoping for a swift reversal in fortunes. Bitcoin had since recovered some of the ground lost earlier in the week, climbing back to $9,845.
CoinDesk analyst Omkar Godbole said that while bearish sentiment had clearly returned, the long-term outlook remains positive for bitcoin bulls.
“Bitcoin closed below $9,614 on Tuesday, confirming a bearish reversal on the daily chart. The invalidation of bullish higher-lows pattern is backed by bearish developments on the short-term charts. Prices risk falling to $9,097 (May 30 high) in the next 24 hours. A close below that would expose the 100-day moving average line, currently located near $8,100.”
“A key indicator is reporting oversold conditions as per the 4-hour chart, so a minor bounce before any drop below $9,097 cannot be ruled out. The long-term outlook will remain bullish as long as BTC is holding above the 200-day moving average line.”
With BTC already apparently heading north, there is a chance this could be a short, temporary correction. Nevertheless, it’s wise for investors to be careful, at least until a more established optimistic price trend re-emerges.