Bitcoin's burst above the $50,000 (roughly Rs. 37.1 lakhs) level didn't last long and chart patterns signal its rally since July is at risk of fading. The largest cryptocurrency fell as much as 4.4 percent Thursday to $46,588 (roughly Rs. 34.6 lakhs), with other tokens including Ether retreating along with the Bloomberg Galaxy Crypto Index. The drop pared Bitcoin's rally since a July low to some 60 percent. Ether price in India stood at Rs. 2.43 lakhs and Bitcoin price in India stood at Rs. 36.86 lakhs as of 5pm IST on August 26.
Bitcoin rally since July low
Source: CoinMarketCap Prices have swung in tandem with the market as traders and analysts increasingly scrutinise algorithmic-trading practices as well as recent reports that seek to differentiate between good and bad altcoins. Many traders have been testing to see which coins perform best at higher trading volumes and prices before using them as a trigger for more buying. 'Sharp Divergence' "This sharp divergence that we have seen between the altcoin performance and Bitcoin's performance recently has come to a head," said Oanda Corp. analyst Craig Erlam. "We are nearing the 'party' phase where even after a lot of negativity, a good news event can take crypto significantly higher. With so much uncertainty in the market, it's entirely possible that this party has come to an end.
60% Rally from July lows may be running out of steam
"The Bitcoin bull run is running out of steam," according to Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co., in New York. "Bitcoin is the dog chasing the car that's already pulled away, there is no doubt about it. But there's a lag between when the dog catches up with the car and it's actually clear sailing for Bitcoin." While the cryptocurrency has steadied from its more recent rout, it's still down about 50 percent from an all-time high in December. Bitcoin could fall further before the rally resumes, a technical analysis tool shows. Bitcoin charting patterns indicate a correction may be on the horizon, with a daily relative strength index reading below 30, according to CryptoCompare. A reading below 30 signals a pullback and last week it hit 30.33.
Chart patterns signal the rally since July is at risk of fading
"We see a material pullback to the 20-day moving average in the $39,000 to $41,000 (roughly Rs. 30 lakhs to Rs. 32 lakhs) area," Evan Asano, a cryptocurrency strategist at Japanese asset manager GMO in Tokyo, said by email. "We'd wait for a stronger close above that to get bullish, though many could use a breather." Bitcoin may consolidate before resuming its advance, according to Asano. The rally is more likely to resume if the EMA50, a Fibonacci retracement tool, tests the bottom of the gap between the July low and September high. Bitcoin on Friday fell as much as 5.5 percent to $46,721. While the benchmark plunged more than 50 percent last year, it's surged 885 percent in 2018, the best annual performance of any asset, according to Bloomberg Barclays index.
The biggest cryptocurrency fell as much as 4.4 percent Thursday to
The drop pared Bitcoin's rally since a July low to some 60 percent. Ether price in India stood at Rs. 2.43 lakhs and Bitcoin price in India stood at Rs. 36.86 lakhs as of 5pm IST on August 26. “The overall trend for Bitcoin is still higher and until the technical indicators start showing signs of loss of momentum, it’s a good idea to keep longs,” said Hao Hong, chief analyst at Bocom International Holdings Co. “When the price was around $40,000, the momentum indicators showed a lot of signs of overbought conditions, but that hasn’t happened in the past few days.” Bitcoin rallied to $6,000 on August 25, the first time since early September, according to data compiled by Bloomberg.
Bitcoin's rally is drawing to a close because we are seeing a combination of overbought conditions and confirmation resistance. It's making new highs without new buyers coming in and selling it off, so prices are getting bid up faster than they can be driven down. Once buyers come in they'll lose out because Bitcoin already has too much momentum. The ideal scenario is if Bitcoin can break out above the $55,000 mark (roughly Rs. 43.2 lakhs). A break below $50,000 (roughly Rs. 34.7 lakhs) would mean a fresh drop back to $40,000 (roughly Rs. 26.8 lakhs). Disclosure: The author of this article owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.