Bitcoin has been caught within an unrelenting consolidation phase for the past several weeks.
The immense turbulence seen within the equities market did put this bout of sideways trading in jeopardy, but the crypto has since stabilized back within the mid-$9,000 region.
There are several factors, however, that seem to indicate that this long-held trading range will result in a sharp breakdown in the days and weeks ahead.
One such factor would be Bitcoin’s recent dip below a key parabolic trendline that has been guiding its uptrend over the past several months.
BTC has also been struggling to hold above the equilibrium of an intense trading range that it has been caught within.
An analyst is noting that a clean break below this level is likely to take place in the near-term, and it could cause Bitcoin to fall into an intense downtrend that leads it down towards $8,100.
Bitcoin Flashes Signs of Weakness After Breaking Key Trendline
At the time of writing, Bitcoin is trading up marginally at its current price of $9,460. This is the level at which it has been trading at in the time following its recent technical breakdown that sent it reeling from $10,050 to lows of $9,000.
It does appear that this sideways trading may be rooted in the stock market’s recent turbulence.
Investors who still view BTC as a safe-haven asset may be holding out on opening any mid-term positions until the traditional markets establish a clearer trend.
It does appear that a correlation between Bitcoin and the stock market does exist, as BTC’s recent $1,000 drop from the five-figure price region did occur concurrent with a massive plunge seen by the benchmark stock indices.
This decline struck a blow to the crypto’s technical strength, as it caused it to break beneath a multi-month uptrend that had been guiding its recovery from its March lows of $3,800.
“Parabolic uptrend has been broken,” one analyst stated while pointing to the chart seen below.
Unless buyers reclaim this level, the analyst’s chart does indicate that BTC may soon reel towards the $7,000 region.
BTC Could See a Sharp Decline as it Hovers Above Critical Support
Another factor that could cause Bitcoin to see some sharp near-term losses is the fact that it is currently hovering just above its wide trading range’s equilibrium level at $9,200.
One popular trader spoke about this level in a recent tweet, offering a chart showing that the range lows it could visit sit at $8,100.
“BTC: Daily closed right at mid-line today in this range between the top/bottom wick. Currently watching for chop the next 24 hours- and would like to see Bitcoin make its way back up – reclaim over $9800 would be bullish IMO. But I personally think BTC goes to $9600+ then drops.”
How BTC trends as it heads into its weekly candle close tomorrow should offer investors with valuable insights.
Featured image from Shutterstock. Charts from TradingView.
This article is Originally posted on CoinCentral.com
Author: Cole Petersen