Crypto Frontline

Bitcoin Drops 16% As Weakness Shows Up

Bitcoin Drops 16% As Weakness Shows Up

Bitcoin Drops 16% As Weakness Shows Up
June 05
11:30 2019

 

The month of June does not seem to start on the same upbeat tone as in May when the Bitcoin price surged impulsively right from the first day of the month. Following the best monthly performance since the end of 2017, Bitcoin weakness begins to show up, as it can be noticed from the latest price action development.

Even though Bitcoin managed to reach $8,900, the key $9,000 resistance proved to be impossible to breach area for the bulls and now the price of the most popular cryptocurrency is facing significant losses.

Short-term support around the 200 MA

So far, the selling had been capped by the 4h chart 200 moving average, but still, the buying is not convincing enough to suggest that buyers returned strongly and they are willing to push the price towards new 2019 highs.

In a period when the CME Bitcoin futures had reached new record levels, Bitcoin is already beginning to show signs of weakness, following a bull run that was not backed by any significant fundamental news.

As you can see from our chart below, following a bearish engulfing bar that formed around $9,000, Bitcoin lost more than $1,600 of its value, all in less than 6 days. Strong sudden dips like the one we are witnessing now are definitely not good for the bullish momentum and might signal that further selling could on the horizon.

Bitcoin drops June 2019

Source: tradingview.com

We must also mention that looking at the monthly time frame, the May candle seems to look exhausted, which generally is a warning signal that a move in the opposite direction of the dominant direction is about to unfold. We don’t know that for sure right now, but if we won’t see the same sustained buying during the month of June, then it is very likely that Bitcoin might be set for a deeper correction during the summer time.

What traders should watch for?

The first key area to watch is the 4h chart 200 moving average, which had thus far acted as support. If sellers manage to break below it, further selling might be next. On the other hand, it will be interesting to see whether buyers will be able to retest the key $9,000 area. A break above the current 2019 high and continuation higher will mean that there’s still steam left in the Bitcoin rally and the price action could head towards the psychological $10,000 area.