Over the last 36 hours, the total crypto market capitalization plummeted nearly 11 percent. The sudden drop aligns with a number of bearish signs that can be seen across the weekly charts of the top cryptocurrencies by market cap. The following technical analysis will evaluate whether Bitcoin, Ethereum, XRP, and Litecoin are bound for a further retracement.
Bitcoin recently broke to the downside of a no-trade zone where it had been sitting for the past month. This trading range was set up between the $7,800 support level and the $8,600 resistance level. Now that BTC moved outside of it to hit a low of $7,300, a further drop is possible.
As a matter of fact, a death cross between the 7-week moving average and the 30-week moving average developed on BTC’s 1-week chart. This is a bearish formation that estimates a trend change from bullish to bearish.
The last time this bearish pattern occurred on Bitcoin’s 1-week chart was in late-March 2018. The cross was followed by a 24 percent retracement that took this cryptocurrency from a high of $8,500 to a low of $6,400. Despite the downturn, BTC was able to find support around the 50-week moving average which served as a rebound point at the time.
Thus far, the recent death cross was able to trigger a spike in sell orders taking the price of Bitcoin down over 9 percent from the $7,800 support level. If the sell-off continues BTC could try to test the 50-week moving average that sits around $7,000.
Even though death crosses are considered extremely bearish patterns, there is still a chance that BTC will bounce off the 50-week MA like it did in early 2018.