- Bitcoin started moving after a prolonged period of consolidation.
- Bitcoin futures collapsed, triggering trading limit.
- A recovery above $6,000 is needed to mitigate the immediate bearish pressure.
BTC/USD is trading at $5,548, down over 10% since this time on Wednesday. The largest digital coin has experienced a strong sell-off triggered by a combination of technical factors intensified by FUD (Fear, Uncertainty, and Doubt).
Bitcoin touched $5,312 low on Wednesday before the technical recovery threw it up to the current levels.
Bitcoin futures on CME reached a trading limit, tumbling down 13% on Wednesday. CME's spokesman explained that the 2-minute pause was initiated before 2 p.m. Eastern Time. A 20% collapse would have led to a hard limit, however, it did not happen.
"From a technical analysis standpoint, as bitcoin's price falls below $6,000 we're seeing liquidation: stop-loss orders automatically going into effect and/or people trying to play the breakout," Mati Greenspan, a senior market analyst at eToro commented.
Bitcoin's technical picture
From the technical point of view, Bitcoin broke free from a very narrow range, triggering a cascade of stop orders. From the short-term perspective, the price needs to recover above $6,000 handle to mitigate the bearish pressure; however, there are no clear signals that the upside correction is gathering pace. The Relative Strength Index (RSI) stays flat in the oversold territory.
On the downside, the critical support lies with $5,300. A sustainable movement lower will exacerbate the decline.
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