Bitcoin, the world’s most valuable cryptocurrency, is showing its weak side for the second week now. Given the 500 per cent rally since a year ago, a breather is actually nothing unusual. From a chart perspective, however, caution is still called for.
After bitcoin marked a new all-time high of $64,899 (Coinbase quote) on 14 April, it switched to correction mode. A few days later, the cryptocurrency already undercut support at the 50-day line at $56,300 and by last week had fallen below the $50,000 mark directly to the GD100 at $49,740.
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Even though it briefly undercut the GD100, bitcoin broke out strongly to the upside on Monday. However, the strong upward momentum was not enough to recapture resistance at GD50. Since then, the coin has been stuck in the middle of the two lines.
From a chart perspective, the bounce is not a good sign. Likewise, the constantly decreasing trading volume during the upward rally – the so-called bearish divergence – points to falling prices.
Chart from Tradingview.com
Bitcoin in dollars
Tension is rising in bitcoin. At prices below the GD100, there is an acute danger. Only when the GD50 is quickly regained and the record high is broken will the all-clear be given. However, since the long-term prospects are still good, such setbacks can be used to (re)buy.