Bitcoin finds support ahead of $5000, retraces portion of daily losses

Eren Sengezer FXStreet

Bitcoin extended its drop from last week's record highs on Wednesday and lost more than $400 to a fresh 6-day low at $5114. After staging a modest recovery in the late NA session, the BTC/USD pair is now trading at $5400, still down 3.6% on the day.

Speaking at an event in Washington, Carolyn Wilkins, senior deputy governor of the Bank of Canada, argued that digital currencies wouldn't be able to replace cash as she said, "Money that’s worth the name to be called money really does have to be a medium of exchange, a store of value – and the digital currencies that are out there right now don’t fulfill them – bitcoin doesn’t, none of them do."

On the other hand, the U.S. Commodity Futures Trading Commission announced that virtual “tokens” used in initial coin offerings can come under CFTC oversight. However, as long as the pair remains above the critical $5000 handle, buyers could return. "If September’s price plunge is any guide, losses on bets that bitcoin will fall within U.S. regulatory jurisdiction could be short-lived. Bitcoin was quick to shrug off China’s move to tighten its grip on trading, extending an eight-fold increase over the past year to a record high of $5,866 on Oct. 13," Reuters reported.

Technical outlook

The pair could face the initial hurdle at $5600 (daily high) ahead of $5850 (record high) and $6000 (psychological level). On the downside, supports could be seen at $5100 (daily low), $5000 (psychological level) and $4815 (Oct. 12 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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