Last month, bitcoin prices rallied to the $8,000 area due in part to anticipation that U.S. regulators would finally approve a bitcoin-based exchange traded fund. That did not happen and bitcoin prices are off about 9% over the past week.
The cryptocurrency was able to shrug off the latest news regarding the SEC rejecting the application for a Bitcoin ETF by Winklevoss Capital Management founders Cameron and Tyler Winklevoss. In what could have been th first cryptocurrency ETF ever, the SEC did not agree with the Winklevoss’ premise that cryptocurrency markets are “uniquely resistant to manipulation.”
However, bitcoin prices are residing in a potentially precarious spot. As of late Thursday afternoon, bitcoin traded just over $7,500, an area some crypto market observers is critically important for the largest digital currency on a technical basis.
“In the last week, bitcoin has fallen about 9 percent and returned to the mid-$7,000s. On Thursday, the cryptocurrency was trading at around $7,500, which according to Robert Sluymer, head of technical strategy at Fundstrat, is a key level that needs to be held,” reports CNBC.
Looking At Bitcoin Charts
“According to a recent survey, more than half (52%) of the respondents said they believe crowd psychology is the main driver of the price of the No. 1 digital currency,” reports MarketWatch.
Recent speculation about a bitcoin exchange traded fund finally coming to life can be seen as an example of mob mentality driving prices higher. As momentum (and speculation) for bitcoin ETF approval has increased in recent weeks, so has bitcoin’s price.
“Sluymer refers specifically to an intraday chart of bitcoin, which shows the cryptocurrency has returned to a key support level it hit in June and again in mid-July. Not only that, but Sluymer also points out that the relative strength index (RSI) of bitcoin indicates it is now ‘very oversold,’ which may prove to be a buying opportunity for the cryptocurrency, but investors need to be careful,” according to CNBC.
Year-to-date, bitcoin is lower by more than 40% and a move below the $7,400 area could trigger more selling pressure.
“This means that should bitcoin drop below the $7,400 level, Sluymer sees a possible plunge back to mid-July lows,” reports CNBC.
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