Judging by the sequence of events, it would seem that Bitcoin is following the lead of Litecoin and the alts, which have been caught in one of their most disastrous declines in recent memory. It just seems wrong, if not irrational, to claim the Bitcoin follows the alts. More plausible is the theory that a major drop in sentiment gripped the entire crypto world, with riskier assets like alts dumped first and at a quicker pace. Bitcoin on the other hand exhibited the reverse profile, edging first toward critical support levels, after which declines accelerated.
BTC/USD is currently trading at $524 on BTC-e, earlier hitting an 11-week low of $521. Even as Litecoin and its ilk faced declines totaling over 20% during the past 48h, Bitcoin’s activity started off more or less muted: it gradually lost no more than 4% in the first 24h, and even made a partial recovery to $570.
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That all changed during the 2nd wave of selling, as BTC/USD suddenly dropped by 4.5% to $545 and unexpectedly found itself hanging on to its now tenuous $545-550 support level, a stronghold for the last 3 months. The momentum of the drop gripping all crypto markets caused this level to give way, and the pair slid another 4.5% to current lows.
The relatively steep drop over the past 48h has sent BTC deep below its 200-day moving average, still catching up to the drop and worth $570. The pair now trades at an 8% discount to this mark, the greatest divergence since a major correction to its May rally following a 51% threat.
Between current prices and $450, there really isn’t any support- the May rally propelled BTC/USD up to highs near $670 nearly unimpeded, save for the aforementioned $550 support level which has already been broken. Further declines to below $500 are a real possibility during the next 7-10 days, and there’s no guarantee of a significant swing opportunity during the next 72h.