Bitcoin has fallen back below $7,000 following a slight relief rally to the upside over the past 48 hours.
The world’s largest cryptocurrency now looks destined to break the $5,900 level of support before dwindling all the way down to yearly lows of below $4,000.
The recent drop in price can be attributed to the exponential moving average (EMA) death cross on the daily chart, which saw the 50 EMA cross the 200 EMA to the downside for just the third time since 2014.
Following both previous crosses, Bitcoin slumped by more than 60% during the peaks of the 2014 and 2018 bear markets.
This time around, a 60% move to the downside will see Bitcoin fall to as low as $3,150, which was also the low last December.
The consistent lower highs since June’s high of $14,000 coupled with the recent death cross are clear signals that Bitcoin is in the midst of a bear market.
The only way to trigger a reversal would be if Bitcoin can rally to above $8,750 within the next week, although a major news event like the recent announcements out of China would be needed to spur the market for this to happen.
From a short-term perspective, Bitcoin needs to break out above $7,400 while holding above the $6,750 level of support.
If the latter breaks to the downside, the historic $5,900 level will come into play. This could pose a key pivot point for Bitcoin as it was used as a level of support throughout the 2018 bear market.
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