Bitcoin Market Update: BTC fails to live up to the status of digital gold

Bitcoin (BTC) resumed the decline during European hours and tested $9,133. While the critical support of $9,000 remains unbroken, the first digital coin is moving within a strong bearish trend amid shrinking volatility. At the time of writing, BTC/USD is changing hands at $9,155; however, if the bearish momentum is retained, the price may retest the above-mentioned support area by the US opening. Bitcoin's market capitalization is registered at $168.6 billion, while its market share is registered at 62.0%.

Bitcoin falls behind gold

Loose monetary policy, low yields and economic uncertainty benefit gold prices as investors tend to flee from risky assets and park their capitals in safe-haven markets. Bitcoin has been frequently touted as a hedge against inflation and a tool invented to shield investors from irresponsible monetary policies; however, unlike gold, it shows little reaction to the global macro developments. 

According to Citi analysts, gold prices may climb to an all-time high in the next six-to-nine months, and break above $2,000 an ounce in the next three-to-five months if the geopolitical and economic situation shows no signs of improvement. Bitcoin is forecasted by retest $8,500 before it starts recovering and gets a chance to retest $10,000. As we have reported in our recent weekly forecast, the first digital currency is totally uncorrelated to fundamental developments, which makes it hard to forecast the near-term price movements. 

BTC/USD: Technical picture

Bitcoin has been drifting towards the lower boundary of the current consolidation range since the previous week. The channel support is created by psychological $9,000, reinforced by 100-day SMA and the lower line of the daily Bollinger Band located on the approach to this barrier. Once it is broken, the sell-off is likely to gain traction with the next focus on a vital support $8,550 created by a combination of 200-day SMA200 and weekly SMA50. This area has been limiting the decline since the beginning of May, and most likely the bears will have a hard time pushing through.

BTC/USD daily chart

On the upside, the price attempted a move below 100-hour SMA but swiftly moved above this area. The next local resistance is created by 200-hour SMA located on the approach to $9,200. This MA has been limiting recovery since the beginning of the day.  A sustainable move above this area is needed for the upside to gain traction with the next focus on Sunday's high of $9,250 and $9,500.

BTC/USD 1-hour chart