The technical picture for bitcoin deteriorated significantly Thursday when the No. 1 digital currency shed more than 5% for a second consecutive day, plummeting through critical support levels on its way to a two-week low below $6,300.
A day earlier, technical guru Rob Sluymer of Fundstrat Global Advisors said in a research note that the next one to two weeks were critical for bitcoin chartists, citing the $6,600 to $6,800 level as crucial support, adding that a break of these levels could see a retest of the August lows below $6,000.
Speaking to MarketWatch on Friday, Sluymer said “that was a very damaging drop,” after bitcoin BTCUSD, -0.34% tanked more than 15% in 24 hours, crashing through the noted support. “There is no strong technical setup for bitcoin, we remain with lower lows and lower highs,” adding that outside of day-trading he doesn’t see any reason to be trading it from the long side.
“If you do [day trade], you have to have a tight stop,” he continued. A stop-loss order, or stop, is a standing order to sell a security if it hits a certain price.
BTC/USD courtesy of TradingView
Furthermore, bitcoin fell below its 100-day moving average, a closely watched momentum indicator. That move could spell trouble—it last occurred on Aug. 2 when it slumped from $7,500 to below $6,000 in less than two weeks, a decline of more than 20%.
But don’t tell owners of virtual currencies this. In a recent SharesPost survey, more than half of those who already own bitcoin and other cryptocurrencies said they plan on adding to their portfolio and 57% of accredited investors and two-thirds of retail investors expect the price of cryptocurrencies to move higher over the coming 12 months.
However, no matter which way you spin it, numbers don’t lie. Bitcoin has fallen more than 50% year-to-date, it’s down 8.8% this month and 17.3% since the beginning of August.
For bitcoin bulls who are looking for a bright spot. At least you don’t own Ether ETHUSD, +0.03% “Given relative performance vs BTC continues to lead to the downside we view the break below $250 as a legitimate breakdown with the next support at $195-$200,” wrote Sluymer.