The bitcoin price fell below $8,000 during a low volume weekend as traders foresee a steeper drop to lower support levels.
When the bitcoin price was initially hovering at around $8,500 following a strong recovery, technical analysts anticipated a rebound to the $9,000 area.
However, subsequent to a noticeable dip in volume, the bitcoin price failed to demonstrate a short term trend reversal to the upside.
Sub $7,000 possible for Bitcoin says trader
According to a cryptocurrency technical analyst and trader known as DonAlt, the current price trend of bitcoin is demonstrating a lack of momentum and little resistance to building sell pressure.
In the near term, the trader said that bitcoin temporarily dropping below the $7,000 support level is a possibility as bulls have struggled to show a significant reaction to important support levels being breached.
“Looks anemic to me. Wouldn’t be surprised by another leg lower wicking into the green zone. I would be surprised by a wick into the $9000s but technically that’s the next best resistance. Currently in a tight range, without any major reaction to the lows being hit,” he said.
Scott Melker, a trader at Texas West Capital, similarly said that bitcoin has to swiftly show a reversal to the mid-$8,000 region in the short term to maintain the hopes for a relief rally alive.
Otherwise, Melker noted that the “channel” of bitcoin is likely to bottom, indicating a further pullback from sub $8,000.
“2 days later, channel is strong. Have not even looked at the chart in 48 hours. Price did go up to the top and was rejected, with a hidden bear div to boot. There’s a div for most tops and bottoms of these local moves. Uneventful price action on low weekend volume.
Price has flipped blue demand into resistance and is now struggling with the EQ of the descending channel. That is also resistance. Both of these areas need to be reclaimed and flipped back to support for further bullish momentum. Otherwise, watch the channel bottom.”
Volume tends to dip during weekends
The daily volume of bitcoin and other major cryptocurrencies tends to drop during the weekend.
Historically, low volume in the markets has left bitcoin vulnerable to sharp minor correction on weekends as bulls fail to respond to abrupt sell-offs.
Based on the data from Messari and OnChainFX, the Real 10 daily volume of bitcoin is estimated to be around $212 million as of October 6, which is relatively low compared to the asset’s volume from June to August.
In the past several hours, as the bitcoin price slipped from around $8,100 to $7,900, around $16 million worth of long contracts on margin trading platform BitMEX were liquidated.
Long contract liquidations could intensify a downside movement in the next 24 to 48 hours, especially considering that the volume in spot markets often dip on the weekends.
The bitcoin price remaining below $8,000 by Sunday evening would lead to four red weekly candles in a row, increasing the likelihood of a deeper pullback in the upcoming weeks.
Click here for a real-time bitcoin price chart.
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