Bitcoin bounced off the top of its long-term wedge formation and might be due for another test of the key support zone. This resistance lines up with the top of a short-term rising wedge and the breakdown from this pattern signals a drop in the days ahead.
The 100 SMA is below the longer-term 200 SMA on the daily time frame to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Price has also fallen back below the 100 SMA dynamic inflection point to indicate that this could hold as resistance moving forward.
RSI is on the move down, also confirming that bearish momentum is in play. This oscillator has a bit of room to slide before hitting oversold levels, which means that sellers could have the upper hand for a bit longer. Stochastic has just made its way down from the overbought region also, and this oscillator has much more room to fall from here.
Reports that Goldman Sachs is backing off its plans to create a bitcoin trading desk is being blamed for the sharp decline. After all, this would be a blow to institutional interest in bitcoin and cryptocurrencies, likely dampening volumes and activity ahead.
This also likely weighed on investors’ optimism that the SEC could approve pending bitcoin ETF applications, especially since the regulator had concerns about potential price manipulation and fraud in connected markets. These concerns were also raised by Goldman Sachs execs, citing that more steps need to be taken for a regulated bank to trade bitcoin.
According to a statement from the bank:
We have not reached a conclusion on the scope of our digital asset offering.
Furthermore, analysts also blame the introduction of a registration process for instant bitcoin exchange ShapeShift for worsening the slide.