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Bitcoin on the Back Foot With Resistance at $8k

Bitcoin on the Back Foot With Resistance at $8k

in Bitcoin & Cryptocurrency published on 23, May 2019

Bitcoin markets are once again defending the downside, following recent rallies that took the bitcoin price beyond $8,200.

Bitcoin Price Pullback

Bitcoin, the world’s largest cryptocurrency shot up by over 12% last Friday. This comes amid signs of a renewed bull run mimicking similar growth trends of recent recoveries in the market.

However, by Monday of this week, bullish optimism gave way to more caution as prices pulled back to $7,581. Prices now seem set to continue to challenge market sentiment. Especially with trading ranges having narrowed over the last 48 hours of trading.

Omkar Godbole, an analyst at Coindesk, said there was a chance bitcoin could fall further if the landmark $7,200 mark was breached. By contrast, he said there are also some potential upside towards $8,500 in the reverse case.

“BTC has traded in a narrowing price range over the last 48 hours, aborting the immediate bullish view put forward by Sunday’s double-digit gains. A range breakdown, if confirmed, would allow a price drop toward $7,200. That looks likely with multiple signs of bullish exhaustion on the daily chart. The outlook, however, would again turn bullish if the contracting triangle ends with a bullish breakout. In that case, the price could rise to $8,500.”

Further Bitcoin Price Falls Likely

At the time of press, BTC was trading at $7,952, up 0.35% on the day. This suggests prices were more likely to fall further before they recover. Highlighting developments further, Godbole said there were signs the market was due for a correction.

“With prices trading well below $8,200, the bearish hammer (or hanging man) candle created on Monday is still valid. That candlestick is widely considered an early warning of a bullish-to-bearish trend change, as discussed yesterday. Add to that, the three rejections at $8,300 seen in the last eight days, as well as the multiple failures to hold onto gains above $8,000, and the cryptocurrency appears overdue for a correction.”

While the figures will be somewhat disappointing for bitcoin bulls, there is still cause for optimism on a longer term view. Bitcoin is still trending upwards and significantly up on the levels seen earlier this year.That’s even if the current trading patterns suggest a further decline on the way.

For those considering a bitcoin investment over the next few days, there is a gambling element involved and the keyword remains ‘caution’. While long term growth is still likely, the potential for short-term turbulence appears to be real.