Bitcoin prices today fell to their lowest level since late June when they tested the bottom of their electricity … [+]
Bitcoin prices, which have been trading for the most part between $ 30,000 and $ 42,000 for nearly two months, have repeatedly tested the bottom of that range recently.
According to CoinDesk data, the world’s most famous digital currency has fallen to just $ 30,426.88 today.
At that point, it was at its lowest level since June 26, as additional CoinDesk numbers show.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Bitcoin’s descending triangle
Chuck Jones, a senior executive for Forbes, wrote about recent cryptocurrency price movements in an article published today, noting that Bitcoin recently formed a descending triangle.
“The descending triangle is a bearish formation that typically forms as a continuation pattern during a downtrend,” says StockCharts.com.
These formations are “bearish patterns that indicate a distribution” or the sale of an asset.
An Investopedia article has more information that says:
“Descending triangles are a very popular chart pattern among traders because it clearly shows that demand for an asset, derivative or commodity is decreasing.”
“If the price breaks below the lower support it is a clear indication that the bearish momentum is likely to continue or increase,” the article added.
Analysts weigh in
Several experts spoke about this situation and offered some important technical analysis that investors could use.
“There is definitely a descending triangle on the daily chart,” said Jake Wujastyk, TrendSpider’s chief market analyst.
“This is generally viewed as a bearish continuation pattern but can break out to the upside in some cases.”
Jason Lau, COO of the OKCoin cryptocurrency exchange, also participated.
“I would generally agree” that Bitcoin has entered a descending triangle, he said.
“However, support levels around $ 30,000 have held up despite repeated testing.”
While Lau talked about the resilience of the digital currency close to $ 30,000, some analysts stressed the losses the digital currency could suffer if it breaks support around this important psychological level.
“As the descending triangle begins to break through previous lows, market participants should watch out for a downward movement on the VWAP anchored by the Covid crash below around USD 26,500,” said Wujastyk.
He also highlighted the digital asset market history.
“Based on the seasonality of Bitcoin over the past 5 years as shown on TrendSpider, August has one of the lowest win rates of the year at 20%,” said Wujastyk.
“That means that since 2016 only one of August 5th monthly closing times was higher than the July closing time.”
“A combination of the bearish technical setup and the low earnings rate for August would suggest a move down rather than up into the remainder of the 3rd quarter.”
“Bitcoin looks precarious and is trading lower along with global markets as concerns about economic recovery mount,” said Pankaj Balani, co-founder and CEO of Delta Exchange.
He found that the digital currency has a far greater chance of falling below $ 30,000 compared to May and June.
Balani stressed that Bitcoin could see “sharp moves down” if Bitcoin “convincingly falls below $ 30,000”.
The analysts who contributed to this article, while often making bearish comments, highlighted several developments that could prove bullish.
“If the descending triangle breaks up, market participants should look for an upward move to test the ‘all-time-high anchored VWAP’ at around $ 42,000,” said Wujastyk.
Jon Pearlstone, editor of the CryptoPatterns newsletter, also spoke about the potential upside of the cryptocurrency.
“Bulls want Bitcoin to break the resistance at $ 35,000, which then brings a target of $ 42,500 into play.”
Katie Stockton, founder and managing partner of Fairlead Strategies, LLC believes that short-term concerns about further digital currency losses could become exaggerated.
“I see where you see the triangle,” she said of the analysts who included the recent price movement of Bitcoin as being in a descending triangle.
“I call it the consolidation phase,” said Stockton.
“I think it’s ‘shake-out ripe,'” she said, referring to a situation where weaker hands sell and stronger hands come in and buy.
In other words, the support that Bitcoin has at nearly $ 30,000 could hold out.
Disclosure: I own some Bitcoin, Bitcoin Cash, Litecoin, Ether and EOS.