Bitcoin (BTC) dropped to its lowest level since October 2017 on Monday, as losses are seen across the broader crypto market.
The leading cryptocurrency fell to $5,165 earlier today â the lowest level since Oct. 18, 2017 â having breached the crucial support of $6,000 last week.
As of writing, BTC is changing hands at $5,283 â down 5 percent on a 24-hour basis and 16 percent week-on-weekÂ â according to CoinDesk’s Bitcoin Price Index (BPI). Further, the year-on-year loss now stands at 32 percent, as prices were trading well above $7,600 on Nov. 19, 2017.
Elsewhere, ethereum’s ETH token, cardano and Tron are also flashing double-digit losses on a 24- hour basis. Notably, ETH fell to $155 earlier today, the lowest level since July 16, 2017, as per CoinMarketCap. Meanwhile, XRP, the second-largest cryptocurrency as per market capitalization, is reporting a 6.5 percent drop.Â Only nine out of top 100 cryptocurrencies by market capitalization are trading in the green and three out of the nine areÂ stablecoinsÂ pegged to fiat currencies.
The sharp losses in the major cryptocurrencies have pushed the total market capitalization down to a 13-month low of $172 billion. In the last five days, the total value has dropped by more than $30 billion.
The risk aversion could worsen in the near-term, as bitcoin is looking increasingly weak on the technical charts.
As seen above, BTC closed last week (UTC) at $5,560, confirming a downside break of the nine-month-long descending channel â a bearish continuation pattern.
The cryptocurrency also closed below the 100-week exponential moving average (EMA), which had been acting as support since June. More importantly, both 50- and 100-week EMAs have shed bullish bias.
The 14-week relative strength index (RSI) of 37.00 is signaling scope for a deeper sell-off.
Therefore, BTC risks falling below the psychological support $5,000 in the near term. Major support below that level is seen around $4,100 (trendline connecting the January 2015 and April 2017 lows.)
Over on the daily chart, the RSI of 15 is indicating that the sell-off is overdone. Hence, a sustained break below the psychological support of $5,000 looks unlikely in the short-term.
The RSI on the 4-hour chart is creating a higher low, despite the lower low on the price chart, marking the development of a bullish divergence. The divergence would be confirmed if the RSI continues to post higher lows and the 4-hour candle closes in the green. That would open the doors to a corrective rally.
- The bearish weekly close has likely set the tone for a drop below $5,000. In the short-run, however, BTC may defend that psychological support level, courtesy of the oversold conditions on the daily chart.
- A minor corrective rally to $5,800 may be in the offing, but that could reinvigorate the bears and bring a sustained drop towards the long-term rising trendline support, currently seen at $4,100.
- A move above the former support-turned-resistance of $6,000 would invalidate the bearish setup.
Disclosure:Â The author holds no cryptocurrency assetsÂ at the time of writing.