5 min read Bitcoin (BTC) dropped below $74,000 early on Monday, its lowest level since August, before recovering part of the move to trade near $74,200. More than $1 billion of leveraged crypto positions were forcibly closed in 24 hours, most of them bets on higher prices, as weekend headlines about an independent board investigation at Nvidia and comments from US Secretary of State Marco Rubio that talks with Iran had made no progress appeared to weigh on sentiment. US spot Bitcoin exchange traded funds (ETFs) also lost about $1.28 billion last week, and US Consumer Price Index (CPI) inflation data is due on Tuesday, 10 November at 1:30 pm (UTC).
Bitcoin comes down to test the 200 day average
When we last looked at Bitcoin on 2 November, it was trading near $78,000. It now sits below the 20 day moving average at $78,006 and the 50 day at $79,190, and it’s coming down to test the 200 day simple moving average at $73,150. Many traders use the 200 day average as a guide to the long term trend, and Bitcoin has traded above it since the August breakout.
Price has also fallen through the $76,000 to $77,000 area that held as support during September, and it has dipped below the September low near $75,000. That adds a lower low to the lower highs that have formed since October.
Bitcoin (BTC/USD) daily chart showing price approaching the 200 day simple moving average (yellow) near $73,150, with the 20 day (white), the 50 day (blue) and the $66,000 to $70,000 support zone. The RSI panel shows the bearish divergence that formed from August to September.
Momentum faded before the drop
The Relative Strength Index (RSI), which measures the strength of recent price moves, had already started to weaken. From August to September, price pushed to a higher high, shown by the green arrow on the chart, while the RSI made a lower high, shown by the red arrow. This is called a bearish divergence, and it can suggest that buying pressure is fading even as price rises.
Bitcoin later failed to hold above $85,000. The RSI is now at 35, below the midpoint of 50 and approaching the 30 level that’s often read as oversold.
What could come next
The 50 day average is still above the 200 day, which suggests that the high timeframe structure hasn’t broken yet. Much may depend on how price reacts around the 200 day average.
- If the 200 day average holds: a bounce from around $73,150 could bring the $76,000 to $77,000 area back into view as potential resistance, followed by the 20 and 50 day averages. Above those sits the $80,000 area, where last week’s rally stalled.
- If the 200 day average fails: attention could turn to the $66,000 to $70,000 zone, the area Bitcoin climbed out of in August. This is a major support zone that Bitcoin may need to hold to remain in its overall high timeframe bullish structure.
- If that zone also gives way: the latest move above $85,000 could turn out to have been a high timeframe fakeout, where price breaks above a level but can’t hold there and reverses.
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