Bitcoin’s price trend is looking bearish following recent losses. The five-month moving average (MA) is favorable for the bears and will likely cut the ten-month MA. This move would indicate a bearish crossover last seen in June 2014.
If this would occur, the long term bitcoin price trend would remain low. In June 2014, we can see an identical crossover where the cryptocurrency dropped 70 percent from $580 to a low of $166 – during the seven months leasing up to January 2015.
The bearish crossover is set to occur at month end if bitcoin’s price trend continues to drop towards the $7,000 mark, which would spur on a deeper sell-off towards the $5,000 mark.
The five-month MA is seen at $8,916 and the 10-month MA is at $8,379 – according to Bitfinex data. At present bitcoin’s price trend is down close to 5 percent in last 24 hours at $7,820.
According to candlestick chart, the lower-highs and lower-lows with downwards 5-day and 10-day MAs indicate a bearish setup. The chart also shows a bearish crossover between 10 day and 50 day moving averages.
The relative strength index (RSI) is below 50.00 but holding on above 30.00 – indicative of “oversold territory”, which leaves space for a sell-off towards $7,000.
If there is an acceptance below 50-week MA at $7,620 it would encourage existing bearish trend and increase likelihood of five month and 10 month crossover.
The 50 week MA acted as a strong support in April, therefore a break below that level may entice a deep sell-off.
Not everyone is bearish, Co-founder and Fundstrat strategist Tom Lee is sticking to his guns with regards to bitcoin prediction of $25,000 and believes it will surpass the $20,000 high in December 2017.
Lee suggests that one key factor is the BTC production and replication costs. On the CNBC “Futures Now” show on Tuesday, Lee said bitcoin was trading at cost due to price of production was equal to the trading price. According to Lee, cost production was close to the trading price. Lee noted that the cost production for BTC production was around $6,000 on Wednesday and remains worth more than its mining cost.
Lee also highlighted that there are institutional investors who are interested in crypto but are waiting it out due to regulatory issues.
Lee advises investors to hold on to their bitcoin:
“Historically, ten days comprise all the performance in any single year of bitcoin’s price. If you just took out those ten days, bitcoin’s down 25 percent a year. So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days”