Bitcoin‘s plunge below $7,000 to a two-month low indicates the cryptocurrency will have a difficult time recovering, technical strategists say.
“The downtrend that began in early May is still intact and will need to be reversed to signal an improvement for BTC,” Robert Sluymer, technical strategist at Fundstrat Global Advisors, said in an email.
For him, $7,777 is the key level bitcoin will have to top to signal an uptrend is underway.
Bitcoin 12-month performance
Bitcoin traded near $6,720 Monday morning. It fell more than 10 percent over the weekend to a low of $6,647.33 on Sunday, according to CoinDesk’s bitcoin price index.
The cryptocurrency is down about 50 percent this year, and more than 60 percent off its all-time high hit in mid-December.
Since then, bitcoin hasn’t consistently hit a technical level known as the “Upper Bollinger Band,” said Frank Cappelleri, executive director, institutional equities at Nomura Instinet. Although the level changes, it stood near $8,577 Monday morning.
That means bitcoin will have to gain about 28 percent for a rally to hold.
The weekend drop in bitcoin followed news late Saturday EDT of a hack at a relatively small South Korean cryptocurrency exchange that involved lesser-known coins, and a Wall Street Journal report on Friday about U.S. regulators investigating potential price manipulation at some major cryptocurrency exchanges.
It’s important for bitcoin to hold support around $6,747 this week, Chris Kimble, CEO of Kimble Charting Solutions, said in an email. If that fails, bitcoin could drop to near $2,000, he said.