Cryptocurrency technical analysts have been warning against buying on the dip after the sell-off that shaved $600 billion from the value of digital coins since January. Bitcoin fell on Thursday, suggesting traders are listening.
A gauge of the 10 biggest, most liquid digital coins dropped to its lowest this year on Wednesday, triggering a flurry of technical studies. While Bitcoin, the largest cryptocurrency, hasn’t hit a fresh trough since June 29, it’s attracting bearish calls as it slips below its 50-day moving average.
The digital token has failed to trade above widely followed retracement levels despite a smattering of good news, such as reports of greater interest from Wall Street in providing services for cryptocurrency trading. Bitcoin dropped 0.9 percent to $6,262 as of 9:02 a.m. in New York.
“Expect further testing of next support level, starting at 6072 followed by 5775,” Rob Sluymer, a technical strategist at FundStrat Global Advisors in New York, wrote in a note Wednesday. Those price levels represent the starting point of the mid-July rally and the year’s low.
Bloomberg Intelligence analyst Mike McGlone said Bitcoin is poised to weaken even further, to 2017’s average level.
“Reverting to last year’s mean of about $4,000 appears likely, getting this year’s decline close to 80 percent, a worthy reciprocal of 2017’s buying frenzy,” McGlone wrote in a note Wednesday.
He called this year’s correction “tame” compared with those seen in previous years.
— With assistance by Dave Liedtka