Despite the two-way action on the price of bitcoin over the last 24 hours, the bears still appear to have the upper hand.
CoinDesk's Bitcoin Price Index (BPI) fell to $13,455 yesterday before rising back above $14,900. At that point, it appeared bitcoin (BTC) had found a bottom, but the ascent was cut short at $14,942 and prices fell further to $12,845 at 04:29 UTC – very likely on fears South Korea may soon announce an outright ban on cryptocurrency trading at exchanges.
With South Korea one of the biggest markets for cryptocurrencies, such a ban by the nation would definitely weaken the demand side pressure. As a result, markets reacted negatively to the news.
However, the initial knee-jerk drop in prices came to a halt seemingly due to later reports clarifying that South Korea may not be able to implement the new legislation anytime soon.
Reuters stated: "Legislation for an outright ban of virtual coin trading will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years."
At time of writing, Bitcoin was trading at $13,7290 – down 4.08 percent from the intraday high of $13,845 (08:59 UTC). As per data source OnChainFX, bitcoin has depreciated by 4.4 percent in the last 24 hours.
The technical charts also favor further downside to prices.
The above chart (prices as per Coinbase) shows:
- Yesterday's bullish hammer-like candle meant the sell-off from $17,174 (Jan. 6 high) has ended at $13,550 (yesterday's low). Also, prices closed (as per UTC) yesterday above the rising trendline (inside the rising wedge).
- However, the bulls failed to capitalize on yesterday's positive price action, and the minor rally stalled at $14,970 before falling to an 11-day low of $12,800 today.
- The price action only adds credence to the bearish continuation pattern and a bearish 5-day and 10-day moving average crossover.
- The relative strength index (RSI) has entered bearish territory (below 50.00).
- BTC is more likely to cut through the support at $12,500 (Dec. 30 low) and may extend losses as low as $10,400–$10,000 over the 72 hours.
- Today's high/low ($14,970 and $12,800) engulfs the previous day's price action. So, today's candle looks like a bearish outside day, indicating the continuation of the sell-off.
- Bullish scenario: A close (as per UTC) today above $14,970 could save the day for bitcoin bulls. That said, only a move above $17,174 (Jan. 6 high) would signal a bearish-to-bullish trend change.
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