Bitcoin falls below $3,500 even though oversold technically
After opening still over $4,000 24 hours ago Bitcoin (BTC) has fallen even below the $3,500 level so far today. Buyers are still not rushing in to take advantage of the low prices even though technically the coin is very much oversold.
The CoinDesk analysis
Even though it is the weekend, Omkar Godpole has a daily analysis of the price movement of BTC on CoinDesk. He notes that early on Sunday Bitcoin prices have been dropping to a point that it could suffer its worst weekly loss in over 5 years. As Godpole's article went to press at 11:00 UTC BTC was trading at $3,520 on Bitstamp. This represents a 36 percent drop from the Monday opening price of $5,553. Unless things change drastically BTC faces its worst weekly loss since the second week of April back in 2013. At that time prices fell a full 44.8 percent to $91 from $165. If the weekly loss is to be confirmed BTC must close today as per UTC below $3,887 or it will be the second biggest loss of 20018 as the first biggest would be the last week of January this year.
The 14-day relative strength index (RSI) shows the one third drop over the week is overdone. However, the market has paid little attention to the low RSI which is normally a bullish sign. Despite the record low readings on the RSI during the last eleven days, the market has continued to find sellers for BTC, This indicates that the "buy the dip" mentality is mostly absent from the market.
BTC is currently trading below $3,760 the support trendline that connects that August 2015 and August 2016 lows. A close below this level will bolster the already bearish signs. These include the move below the 200-week exponential moving average (EMA) and the declining 5 and 10-week EMAs.
Based on his analysis Godpole concludes: "BTC could drop to the 200-week simple moving average (SMA) support of $3,126 if prices close today below the ascending trendline support. The bearish momentum, however, may weaken in the next few days, as the 14-week RSI is closing on oversold territory (below 30.00) for the first time since January 2015. The outlook as per the weekly chart would remain bearish as long as the 5- and 10-week EMAs continue to trend south."
24 hours ago the price of BTC was $4,205. After going as high as $4,218 the price fell as low as $3,447. It has recovered somewhat at 11:40 Central Standard Time trading at $3,664 but this is still down over $500 dollars from its open and still below the $3,7600 level mentioned by Godpole. The price is so low that many mining companies must be experiencing significant losses for each coin mined depending on their costs of electrical power.