Under Pressure: Bitcoin Price Could Defend $5.6K

Down two-thirds from its December all-time high of $20,000, bitcoin (BTC) now risks printing fresh 2018 lows below $5,755.

The corrective rally seen over the weekend failed to penetrate the key rising trendline hurdle of $6,480 on Monday, allowing the bears to make a strong comeback.

As a result, the leading cryptocurrency fell below $6,000 (February low) and extended the slide to $5,859 earlier today – the lowest level since June 29 – according to Bitfinex data.

As of writing, BTC is changing hands at $6,032 – down 6 percent in the last 24 hours. Despite sharp losses, bitcoin is the fourth best-performing cryptocurrency among the top 100 cryptocurrencies by market capitalization, according to CoinMarketCap.

Other cryptocurrencies are reporting bigger losses. For instance, 92 out of the top 100 cryptocurrencies have suffered double-digit losses on a 24-hour basis.

Further, the bitcoin dominance rate, a measure of BTC's market share, jumped to an eight-month high of 53.7 percent today.

Hence, it seems safe to say that the cryptocurrency markets have turned risk-averse, that is, investors are venturing out of the high-risk alternative cryptocurrencies and into well-established cryptocurrencies like BTC, and then possibly on to fiat currency.

Looking ahead, the downtrend in bitcoin prices could continue as the technical chart analysis is calling a deeper sell-off – although support at $5,650 could hold for now.

The bears are likely to be feeling emboldened following the bull failure at the descending trendline hurdle despite the bullish divergence of the relative strength index (RSI) seen in the chart above.

More importantly, the bullish RSI divergence has been invalidated (prices dropped below $6,000) within three days of confirmation, which indicates the bearish sentiment is quite strong.

What's more, the major moving averages (50-candle, 100-candle, and 200-candle) continue to trend south in favor of the bears.

Thus, BTC could hit fresh yearly lows below $5,755 (June low) this week.

As the above chart shows, BTC could encounter support around $5,650 (trendline drawn from the February low of $6,000 and the June low of $5,755).

BTC may, however, defend support at $5,650 in the short-term, as the cryptocurrency is looking oversold, having dropped more than 40 percent over the last three weeks.

If the support at $5,650 is breached, though, then the lower end of the falling channel, currently located at $5,340, could come into play.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; Charts by Trading View

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