Bitcoin bounced off the top of its descending channel on the 4-hour time frame, signaling a continuation of the downtrend. Applying the Fibonacci extension tool shows the next potential downside targets.
The 38.2% extension is located near the swing low of $6,950 and the 50% extension is at the channel bottom at $6,750. Stronger selling pressure could take it to the 61.8% extension at $6,500 or the 76.8% extension near $6,300. The full extension is near the $6,000 major psychological level.
The 100 SMA is below the longer-term 200 SMA on this time frame to confirm that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse. The gap between the moving averages is also widening to reflect stronger selling pressure.
RSI is moving lower to confirm that sellers have the upper hand while stochastic is also heading south so bitcoin could follow suit. If buying pressure resumes, though, a break past the channel top and swing high could spur a test of the inflection points at the moving averages.
Although bitcoin has been able to draw support from geopolitical risks to some extent, it has still been vulnerable to negative commentary. The latest ones have come from Nobel Prize-winning economist Robert Shiller and Ripple CEO Brad Garlinghouse.
According to the former, bitcoin could be extinct by the next 100 years. Shiller said in an interview with CNBC:
“Bitcoin won’t look anything like it is today. It will have a different name, if it exists. There will have been many hard forks changing it and changing it. And, it’ll be a matter of dispute whether it exists or not.”
Meanwhile, the Ripple CEO said that bitcoin price influence over other digital currencies could be over soon, saying:
“There’s a very high correlation between the price of XRP and the price of bitcoin, but ultimately these are independent open-sourced technologies. It’s early, over time you’ll see a more rational market and behaviors that reflect that.”
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