Bitcoin’s (BTC) price may soon return to $9,000, however, according to the technical charts, the situation is not as stable as it looks.
Bitcoin fell to a 5.5-week low of $7,335 on the BPI yesterday, a drop linked to reports that Twitter is planning to ban cryptocurrency ads. In recent weeks, both Facebook and Google have announced similar bans on advertising content related to crypto exchanges and token sales.
But, as predicted, the drop to a multi-week low was short-lived and the cryptocurrency got back to its original value – possibly due to a bullish relative strength index (RSI) divergence – clocking a high of $8,435 earlier today.
The Financial Stability Board (FSB), which coordinates financial regulation for the G20 economies, yesterday rejected calls for stricter regulation of cryptocurrencies, according to a Reuters report – news that may have played a part in boosting BTC prices.
However, it is worth noting that long-term moving average crossovers are not reliable , as a major chunk of the sell-off has already run its course by the time the crossover actually occurs.
A minor rally to $9,000 cannot be ruled out in the near-term, but gains are likely to be capped around the descending (biased bearish) 10-week MA of $9,710.
Last week’s sell-off was a negative moment follow-through to previous week’s bearish “outside-week” candle, meaning the bears are in control and could take prices as low as $6,456 (weekly 50-MA).
Looking further ahead, bitcoin looks set for a drop to at least the weekly 50-MA, currently seen at $6,456. Further sell-off appears unlikely as a “death cross” (lagging indicator) would be confirmed by then, indicating a short-term bottom has been made.
Until there is a weekly close above $11,700 there won’t be a fresh bull run towards the old high pics.