4 Reasons Why Bitcoin's Price Could Now Drop to $6K

Published on by Coindesk | Published on

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Bitcoin's drop to three-week lows today has likely kick-started a bearish move towards the major support at $6,000, technical charts indicate.

The leading cryptocurrency fell to $6,252 at 7:15 UTC on Bitfinex - the lowest level since Sept. 19 - and was last seen trading at $6,300, representing a 5-percent drop on a 24-hour basis.

Further, the big drop in the equity markets this morning may not bode well for BTC, as the cryptocurrency is still being treated as a risk asset.

As a result, bitcoin price volatility, as represented by Bollinger bandwidth and the gap between weekly high and low, fell to 21-month lows and 15-month lows, respectively, last week.

A prolonged period of low volatility usually makes way for a big move in either direction.

In BTC's case, that move looks to have already started to the downside, with a breach of the lower band, and may move further towards $6,000.

The bearish view put forward by the negative crossover between the 5-month and 10-month EMAs has gained more credence, courtesy of BTC's failed breakout and a drop to three-week lows.

BTC's drop to lows below $6,300 comes a day after the Dow Jones Industrial Average shed 800 points.

Looking ahead, the equities could drop further, courtesy of the rising bond yields, and push BTC lower.

A violation there would allow a deeper drop to $5,870 - support of the trendline drawn from the June low of $5,755 and the August low of $5,859.