According to the Fairlead strategy, the cryptocurrency market will continue if Bitcoin breaks below $20,000.
Based on technical analysis, the research firm reported that Bitcoin's secondary support reached $13,900.
“Short-term momentum has turned negative due to a new daily sell signal from the MACD,” said Fairlead.
Until the cryptocurrency market confirms that Bitcoin has fallen below $20,000, Fairlead Strategies noted on Tuesday.
The research firm, which focuses on technical analysis, highlighted that Bitcoin is currently testing the support range between $18,300 and $19,500 after last week's CPI-driven sell-off. Bitcoin fell about 0.5% to $18,950 on Wednesday afternoon after the Fed announced a 75 basis point rate hike.
According to Fairlead's Cathy Stockton, a confirmed break below this support range, represented by two consecutive weekly closes, increases the risk of Bitcoin falling to secondary support near $13,900. This represents a potential downside of 29% from current levels, and bitcoin's weakness is likely to spread to other cryptocurrencies.
“Long-term negative momentum is building for each monthly MACD histogram, allowing long-term oversold conditions to be absorbed. While this is happening, it may take months for a significant change to occur," Stockton said, referring to the moving average convergence-divergence indicator. . . "Short-term momentum has turned negative on a new daily sell signal for MACD, increasing risk as long-term support is tested."
Bitcoin's short-, medium- and long-term momentum signs have all turned bearish amid continued declines, with the 50-day moving average suggesting momentum may continue to wane, Stockton said.
Another bad sign for the cryptocurrency market in general is that, since the beginning of September, Bitcoin has once again outperformed Ether in relative terms.
After its successful merger, Ether was in sell mode, moving the Ethereum blockchain to a proof-of-work system. Ether's decline has convinced Stockton that the cryptocurrency is more likely to test $1,000 as support, which is a potential 27% downside from current levels.
"The move in favor of Bitcoin is broadly bullish for the crypto market, reflecting a defensive rotation as Bitcoin and other altcoins enter a 'retest' support mode," Stockton said.
But if Bitcoin can avoid an established break below support and regain resistance around $22,000, it could reverse its downward trajectory, he said. Until then, expect the cryptocurrency bear market to continue.
Read the original article on Business Insider